Higher domestic demand, lower cracks pull jet fuel exports down in October

Lower international prices of aviation turbine fuel (ATF) cracks and a fast paced recovery in domestic air passenger traffic — leading to higher fuel consumption — pulled down India’s jet fuel exports by 17 per cent on an annual basis in October 2023.

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According to the Petroleum Planning and Analysis Cell (PPAC), ATF exports stood at 529,000 tonnes in October 2023. However, on a M-o-M basis, the outbound shipments were eight per cent higher from September.

ATF exports reached 900,000 tonnes in August 2023, which was the highest in the last 17 months. The outbound shipments rose consistently from April to August 2023.

Commenting on the export dynamics, ICRA’s Senior Vice President & Co-Group Head Corporate Ratings Prashant Vasisht said, “The international product price of ATF was on an increasing trend in the last few months resulting in healthy product cracks. ATF crack spreads witnessed an uptick in the last few months with improved demand owing to an increase in overall air travel activity. However, Special additional excise duty (SAED) on ATF impacted exports from the second half of August 2023.”

In October 2023, the ATF cracks were lower with higher domestic consumption as compared to October 2022, resulting in lower ATF exports vis-à-vis October 2022, he added.

Rising air traffic

According to ICRA, domestic air passenger traffic for October 2023 is estimated at around 126.4 lakh, higher by about 3.2 per cent, in comparison to around 122.5 lakh in September 2023.

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It also witnessed an 11 per cent Y-o-Y growth from 114 lakh in October 2022. The domestic passenger traffic was also three per cent higher than pre-Covid levels of around 123 lakh in October 2019.

The airlines’ capacity deployment in October 2023 was higher by around 8 per cent than that of September 2022, but it was lower by four per cent in comparison to the pre-Covid levels (October 2019).

It is estimated that the domestic aviation industry operated at a passenger load factor (PLF) of around 86 per cent in October 2023, against about 83 per cent in October 2022 and around 84 per cent in October 2019 (pre-Covid levels).

India’s jet fuel consumption has also been rising consistently since September 2023 (657,000 tonnes) to 691,000 tonnes in October. It was flat at 690,000 tonnes last month.

Gasoline exports decline

India’s exports of petrol, also called motor spirit or gasoline, fell 32 per cent M-o-M to 671,000 tonnes in October 2023. However, on an annual basis, it was 34 per cent higher.

Vasisht attributed the decline in outbound shipments to the end of the summer driving season.

“The summer driving season supported the export demand till August 2023 with spillover to September 2023. The end of peak travel summer season resulted in lower gasoline demand which has impacted the international prices and in turn exports from India in Oct 2023,” he added.

The Singapore 92 RON Spot Index was around 10 per cent lower in October 2023 as compared to September 2023. Generally, petrol exports witness a declining trend post completion of summer driving season. The exports remained higher in October 2023 than October 2022 due to higher crack spread, he explained.

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