Oct saw sharp rise in demand for power, oil

In Oct, demand for oil rose to 17% y-o-y after 15% growth in Sept; consumption of power rose 11% in Sept and 9% in Oct, from below 5% earlier

Of late, the standard refrain of many in corporate India has been that the situation on the ground has not changed much, as reforms have slowed. However, some analysts and economists believe the government's bottom-up approach to growth is showing some results. Demand for oil, power, plastics and bitumen, for instance, is seen to be up compared to last year.

For a start, demand for oil has shown a pick-up and not all of it is due to the fall in price, claim economists. India's oil demand has remained largely muted over the past couple of years, as the economy continued to cool off. However, in October, the demand rose to 17 per cent year-on-year (yoy) after 15 per cent growth in September. The rise has come from both the industrial and transport sectors.
 

Consumption of power has also risen. According to Credit Suisse, its consumption rose 11 per cent in September and nine per cent in October, from below five per cent earlier. Demand for plastics and bitumen has also shown an uptrend. That for the former is up 54 per cent from last year, suggesting that construction of roads is picking up, too.

This is reflecting in the order books of some infrastructure players, too, claim analysts. According to Emkay Global, construction order books of road developers are strong, with two-year plus revenue visibility, given that tendering and awarding activity has increased. Financial bids of projects worth Rs 32,400 crore are set to open in the next two months from National Highways Authority of India and the ministry of road transport and highways, which would provide healthy traction to the order books of road developers.

While tendering activity is still weak in the above sector, some others are seeing a pick-up in this, such as water and railways. According to Emkay, "Tendering increased in water supply (up 76 per cent yoy, accounting for 10 per cent of the total tenders issued in October), and railways (up 254 per cent yoy, accounting for 16 per cent of the total tenders issued in October). The total value of tenders issued in year-to-date FY16 stood at Rs 301,500 crore (up 33.6 per cent yoy)."

---

PICKING UP

• In Oct, the demand for oil rose to 17% year-on-year after 15% growth in Sept
  

 

Consumption of power rose 11% in Sept and 9% in Oct, from below 5% earlier, according to Credit Suisse