<article><p class="lead">Most of India's state-controlled refineries have operated at maximum capacity so far this month, undeterred by a drop in domestic transport fuel demand.</p><p>BPCL has been operating its 310,000 b/d Kochi, 240,000 b/d Mumbai and 156,000 b/d Bina refineries at 100pc of nameplate capacity and sometimes higher, while MRPL has also been running its 300,000 b/d refinery in Mangalore at maximum levels, market participants close to the refiners told <i>Argus</i>. Likewise, HPCL's Mumbai refinery, where capacity was expanded to 190,000 b/d last year, and its 166,000 b/d Visakhapatnam (Vizag) refinery have been at 100pc nameplate capacity or above. </p><p>IOC bucked the trend. Its refinery utilisation rate has been around 93-97pc, pushed down by reduced runs at the 161,000 b/d Haldia refinery following a fire last month. Haldia has been operating at around 50pc, market participants said.</p><p>India's state-run refiners have been <a href="https://direct.argusmedia.com/newsandanalysis/article/2284871">running their plants hard in the past few months</a> on the expectation that domestic fuel demand would pick up. Given that consumption has been lacklustre this month but regional <a href="https://direct.argusmedia.com/newsandanalysis/article/2288819">product margins</a> are robust, it is likely they will opt to export or replenish their inventories, market participants said. Indeed, <a href="https://direct.argusmedia.com/newsandanalysis/article/2292638">IOC offered to sell a spot gasoline cargo for February loading</a> this week.</p><p>Middle distillate margins in Asia-Pacific have firmed in recent weeks. Asian gasoil margins — <i>Argus</i>-assessed Singapore 10ppm sulphur gasoil swaps against Dubai crude values — strengthened from just $12.88/bl on 3 January to around $15-16/bl by 20 January on the back of limited supplies from China and the Mideast Gulf. </p><p>Asian jet margins — Singapore jet fuel swaps to Dubai crude values — started off the year at $10.38/bl on 3 January but landed at around $12/bl by 20 January. The rise was supported by kerosine demand for heating and the easing of travel restrictions in Thailand and Vietnam.</p><p><a href="https://direct.argusmedia.com/newsandanalysis/article/2290858">Gasoline margins have fared less well</a>, with rising Covid-19 cases in key gasoline-consuming countries in the region weighing on driving activity. Asian gasoline margins — <i>Argus'</i> 92R gasoline spot assessments against Ice Brent — were assessed at $12.14/bl on 3 January but fell steadily to around $10.5/bl in recent days.</p><h2>Demand downturn</h2><p><a href="https://direct.argusmedia.com/newsandanalysis/article/2292430">Transport fuel consumption in India declined by about 14pc</a> on the month in the first half of January as concerns over the Omicron variant constrained mobility. Driving activity in the country has been steadily decreasing this month — it is currently 78pc above a 13 January 2020 baseline, compared with 132pc above the baseline in December, according to data from US technology firm Apple.</p><p>Meanwhile, footfall at domestic airports has averaged 446,000/day so far this month versus a 717,000/day average in December, according to <i>Argus</i> <a href="https://direct.argusmedia.com/newsandanalysis/article/2290032">estimates</a> based on daily traffic data published by the country's civil aviation ministry. Aircraft movements in India have averaged 4,500/day so far this month, compared with 5,600/day in December.</p><p class="bylines">By Sathya Narayanan, Aldric Chew and Cara Wong</p></article>
