Singapore — India's sagging domestic demand has pushed Mangalore Refinery and Petrochemicals Ltd. to cut output of refined products further, as the state-run refiner tries to balance supply-demand dynamics amid the coronavirus pandemic, industry sources told S&P Global Platts this week.
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MRPL, which runs a 300,000 b/d refining facility in Mangalore, was heard from market sources to have cut output of transportation fuels by around 50%, while output of LPG has been slashed to about 20-25%.
With the cuts, MRPL joins fellow state-owned refiners Indian Oil Corp. and Bharat Petroleum Corp., who have reduced rates at their respective refineries by up to around 30% nationwide, Platts reported earlier.
No. 3 refiner Hindustan Petroleum Corp. has likewise cut its throughput at its 150,000 b/d Mumbai refinery by a tenth, though the 166,000 b/d Visakhapatnam refinery continues to maintain its normal run rates.
Demand outlook grim
The move comes following a drastic drop in domestic demand caused by the 21-day nationwide lockdown imposed March 25.
"India demand is practically at a standstill since the lockdown, and refiners have no choice but to cut rates else they will fill up their tanks too fast," a source with an Indian company said.
As of Wednesday, India's confirmed infected cases were over 5,000, with the death toll rising to 160, according to media reports.
With the rising number of confirmed cases and the lockdown nearing its completion on April 14, focus is on whether travel restrictions will be extended. Several state governments such as Maharashtra, Telangana and Punjab have reportedly voiced their support for an extension.
"It is certainly on the cards for it [the lockdown] to be extended. But it will put a lot of pressure on the economy," the source added.
India's Parliament is slated to meet this week to discuss the outcome of the lockdown.
Against the backdrop of falling demand, India will likely continue to raise prompt product exports, in order to alleviate pressure on domestic supply, sources said.
Thus far, at least 339,000 mt of gasoline has been offered by Indian refiners on the spot market for April, up from the 256,000 mt in March, based on open tenders seen by Platts.
On middle distillates, a total of 959,000 mt of gasoil and jet fuel have also been offered in the spot market for April loading, up from the 371,000 mt offered for March loading, respectively.
"Indian supply is adding pressure to the whole complex. Pushing discounts even lower," another source said.