By Aditya Raghunath
Investing.com — Ratings agency ICRA Ltd (NS:), in a note on Monday, has said that it is possible refining and marketing companies might reduce throughput as lockdowns in multiple states in India take their toll on fuel demand.
Karnataka became the latest state to impose a 14-day lockdown on Monday. Maharashtra, Delhi, Chattisgarh, Rajasthan, and Jharkhand have already implemented some form of lockdown. This has already led to lower demand for aviation and auto fuel.
ICRA said that if the possibility of this trend gathering pace across the country can’t be ruled out. States like Gujarat, Bengal, and Uttar Pradesh are not seeing a drop in their numbers at all.
“Refining and marketing companies are cutting down on capacity utilization although the demand slowdown is not as severe as April 2020.
“Nevertheless, the capacity utilization and revenues and profitability of the refining and marketing companies are likely to be adversely impacted owing to the demand slowdown, said Sabyasachi Majumdar, Group Head and Senior Vice-President at ICRA.
Apart from India, Japan is also facing a full-blown second wave crisis and has imposed severe restrictions on movement in Tokyo, Kyoto, and two other regions. This has thrown the Olympic Games in danger.
ICRA said that the benchmark Singapore gross refining margins are still subdued to lower demand and are unlikely to improve in the near term.