Beware of the ides of June, with apologies to the Roman saying. The disappearance of growth in POL consumption in the industrial sector in June is a sure of sign of distress that industry watchers must take cognizance of.
The following data proves the point:
Naphtha consumption declined 4.3% in June in relation to the same month last year. there has been a degrowth of 3.4% during April-June as well
FO and LSHS consumption was down 12.9% in June and 7.7 % in April-June
Petcoke, a low cost favorite among furnace owners in India, declined a massive 18.6% in June and 1.1% in April-June
LDO consumption recorded a de-growth of 5.6% and 1.1%
Was this slack in liquid fuel or feedstock production picked up by higher gas consumption? Not really
Gas consumption grew only 0.75% in June and 0.63% in April-June
The data supports the fact that core sector industrial growth slowed down to a 19-month low of 0.4%, much lower than 7% recorded in June, 2016
Is it just the adverse impact of demonetization or is it a deeper more insidious peril looming around the corner?
Transportation sector sees robust growth: Even as industrial POL consumption slows and goes negative, the transportation sector continues to thrive, albeit at a slightly slower pace. MS consumption during June, 2017 recorded a robust growth of 11.9% and 10.6% in April-June, 2017.
Diesel consumption grew 6.5% and went up cumulatively to 5.8%
Rapid vehicle growth is attributed to these consumption figures
Air travel continues to soar: June ATF consumption grew 9.2% while in April-June, the increase was 9.9%
So even as the industrial consumption tanks, the transportation segment continues to see growth.