For the third year in a row, Indian fuel consumption has eclipsed China’s. In fact, it grew by 10.7% in 2016, the highest growth rate in 16 years, according to the Indian Oil Ministry. This should be a cause for cheer; as one of the main reasons that crude prices collapsed in 2015 was due to China's economic slow down. With India now apparently taking China’s place as the motor of oil growth in Asia and the world, how long can this hold?
Indian growth in 2016 was down to cheap oil, an advantage that is being erased as crude oil prices climb on OPEC’s decision to enforce a supply freeze. Higher crude means higher oil product prices; so the transport boom in gasoline and aviation fuel sales might peter out. LPG penetration was also a major factor in expanding demand, but this will also begin to slow down. The surge in automotive ownership following two years of low oil prices led gasoline and diesel sales to leap by 12.2% and 5.6%, while LPG grew by 11.3%. This sort of growth figures might not be able to continue. It should be noted, however, that these statistics are based on the Oil Ministry’s fuel consumption statistics, which is generally higher than official oil demand figures as it excludes oil for non-fuel use but indicates trends.
The annual figures, however, mask developments that occurred at the end of 2016. A demonetisation drive to crackdown on tax dodgers and counterfeiters by removing the 500 and 1,000-rupee notes from circulation has dented consumption; fuel consumption spiked in November as consumers rushed to stock up, and grew by only 4.3% in December. Across India, there is a slowdown in consumption, affecting all products from coconut oil to diesel to scooters, as consumers hold back on purchases to monitor the ongoing demonetisation (even though old notes are still valid for buying automobile fuel and cooking oil). This has affected the rural population in particular, heavily cash dependent. Alarmists are saying that that demand growth could slow by as much as 80%. That would be a worst-case scenario. The more likely outlook is that growth will fall to the 6-8% range instead. Because oil demand is resilient, the population will adapt to the new monetary rules and the cash crunch will abate, leading to stronger growth in the second half of 2017 offsetting a slower first half.
And even the first half has bright spots. This is an election year for India, and the political arena will see the main parties stage huge rallies across the vast country, requiring gasoil for generator and heavy transport, as well as gasoline. The size of the country, including its large rural population, also means voters will have to travel great distances to reach a ballot box, with political parties and the government again stepping in to ferry people to cast their vote.
Looking forward, the government’s "Make In India" initiative to boost local manufacturing and a slew of new petrochemical projects onstream should ensure a stable basis for growth over the next 3 - 5 years. Higher fuel prices might choke off some momentum, but India is ready to inherit the crown of the world’s oil demand driver from China. Take note that, India’s economy is very different from China’s centrally-planned one, India's economy is more dependent on private entreprise and complex political factors. Though this should provide a broader base for fuel growth, but will probably not reach the dizzying heights of double-digit growth that China did. But grow it will, and the oil world will be banking on that.
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Already, lubricant players have established their footholds here in Bangladesh, with international brands.
However, the situation is being tough as too many brands entered in this market. So, it is clear, the lubricants brands are struggling to sustain their market shares.
For this reason, we recommend an impression of “Lubricants shelf” to evaluate your brand visibility, which can a key indicator of the market shares of the existing brands.
Every retailer shop has different display shelves and the sellers place different product cans for the end-users. By nature, the sellers have the sole control of those shelves for the preferred product cans.The idea of “Lubricants shelf” may give the marketer an impression, how to penetrate in this competitive market.
The well-known lubricants brands automatically seized the product shelves because of the user demand. But for the struggling brands, this idea can be a key identifier of the business strategy to take over other brands.
The key objective of this impression of “Lubricants shelf” is to create an overview of your brand positioning in this competitive market.
A discussion on Lubricants Shelves; from the evaluation perspective, a discussion ground has been created to solely represent this trade, as well as its other stakeholders.Why “Lubricants shelf” is key to monitor engine oil market?
The lubricants shelves of the overall market have already placed more than 100 brands altogether and the number of brands is increasing day by day.
And the situation is being worsened while so many by name products are taking the different shelves of different clusters. This market has become more overstated in terms of brand names and local products.
You may argue with us; lubricants shelves have no more space to place your new brands. You might get surprised by hearing such a statement. For your information, it’s not a surprising one.
Regularly, lubricants retailers have to welcome the representatives of newly entered brands.
And, business Insiders has depicted this lubricants market as a silent trade with a lot of floating traders.
On an assumption, the annual domestic demand for lubricants oils is around 100 million litres, whereas base oil demand around 140 million litres.
However, the lack of market monitoring and the least reporting makes the lubricants trade unnoticeable to the public.
Headline crude prices for the week beginning 11 February 2019 – Brent: US$61/b; WTI: US$52/b
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