India Commodities Demand

Written on Sept 5, 2024

The commodities trends in India reflect significant developments in oil, gas, and grains as follows:

Oil: India has become the largest buyer of Russian crude oil, with imports reaching a record 2.07 million barrels per day in July 2024, which accounted for 44% of India's total oil imports. This increase is largely attributed to discounts offered by Russia in response to Western sanctions, influencing the shift in global trade flows of oil 1. The Indian government aims to reduce crude oil imports by 25% and is focusing on green fuel alternatives, particularly hydrogen, while also looking to become a leading manufacturer of lithium-ion batteries and green-fuel automobiles 2.

Gas: The share of LNG in India's gas mix is projected to rise from 48% in fiscal 2024 to 50% in the current financial year due to an expected moderation in domestic gas production starting fiscal 2028. This anticipated increase in LNG reliance comes amidst discussions around decreasing import duties on essential energy supplies 3. Moreover, the Indian government has shown a growing interest in diversifying gas supply sources to stabilize energy imports strategically 4.

Grains: India has witnessed a dramatic shift in corn trade dynamics, moving from being a net exporter to a likely net importer for the first time since 1999/00. This change is driven by increased domestic demand for corn arising from governmental ethanol policies and a growing poultry sector 5 6. In addition to corn, India's rice export prices have surged, reaching the highest levels in 15 years due to export restrictions imposed by the government, which primarily affects non-Basmati white rice 7. Overall, the government's approach to managing supply and export restrictions aims to maintain adequate domestic supplies while addressing food inflation concerns 8.

These trends highlight India's evolving position in the global commodities market as it navigates challenges like dependency on imports, domestic production shifts, and strategic energy transitions.

Infrastructure

India's infrastructure for storing and using commodities is multifaceted, encompassing oil, gas, and grains:

Oil: India has developed extensive infrastructure to support its significant oil imports. The country has strategic petroleum reserves (SPRs) to store crude oil, which are crucial for energy security. These reserves are located in underground rock caverns at Visakhapatnam, Mangalore, and Padur. Additionally, India has a network of refineries and pipelines that facilitate the transportation and processing of crude oil into various petroleum products. The country's focus on reducing crude oil imports by 25% and transitioning to green fuels like hydrogen and lithium-ion batteries further underscores the need for robust infrastructure to support these initiatives 9.

Gas: India's gas infrastructure includes LNG import terminals, storage facilities, and an extensive pipeline network. The share of LNG in India's gas mix is expected to increase from 48% in fiscal 2024 to 50% in the current financial year, driven by the anticipated moderation in domestic gas production starting fiscal 2028 10. This infrastructure is critical for ensuring a stable supply of natural gas to meet the country's growing energy demands. The government is also exploring ways to diversify gas supply sources to enhance energy security 11.

Grains: India's grain storage infrastructure includes a combination of government-owned and private facilities. The Food Corporation of India (FCI) and state agencies manage large-scale storage facilities, including warehouses and silos, to store grains like wheat and rice. The country has also seen a shift in corn trade dynamics, moving from being a net exporter to a likely net importer due to increased domestic demand driven by ethanol policies and a growing poultry sector 12. Additionally, India's rice export restrictions have led to a surge in rice prices, highlighting the importance of maintaining adequate storage and supply management to address food inflation concerns 13.

These infrastructure components are essential for supporting India's commodity needs and ensuring the stability of supply chains across oil, gas, and grains.

9: Union Transport Minister Nitin Gadkari highlighted the challenges of reducing India's crude oil imports by 25% at the BloombergNEF summit. He emphasised the potential for green fuel, particularly hydrogen, and aimed for India to become a leading manufacturer of lithium-ion batteries and green-fuel automobiles. Gadkari noted that India's low production costs would attract automobile companies and reduce import dependency. View Source10: He expects the share of LNG in India's gas mix to increase from 48% in fiscal 2024 to 50% in the current financial year. Since India's domestic gas production is expected to start moderating from fiscal 2028, the country's reliance on LNG would further rise as India looks to increase the share of natural gas in the energy mix, he said. View Source11: He expects the share of LNG in India's gas mix to increase from 48% in fiscal 2024 to 50% in the current financial year. Since India's domestic gas production is expected to start moderating from fiscal 2028, the country's reliance on LNG would further rise as India looks to increase the share of natural gas in the energy mix, he said. View Source12: A surge in domestic demand for corn in India has sharply curtailed exports and led to record imports for TY 2023/24 (Oct-Sep). Driving factors for this rise in demand include government ethanol policy and a growing poultry market. Historically, India has been a net exporter that supplies significant volumes of corn to South and Southeast Asia. For the first time since 1999/00, India will import as much corn as it exports. View Source13: In September 2023, USDA reported that global rice export prices had peaked to the highest levels in 15 years due to rice export restrictions imposed by India (on non-Basmati white rice, covering 75-80% of Indian rice exports) in July 2023 (including a 20% export duty on parboiled rice).96 Prices began rising in 2022, following floods in Pakistan — the world’s fourth-largest rice exporter (Table 5) — which impacted global supply. Rice is a water-intensive crop, and an earlier-than-usual El Niño in the 2023 season was forecast to reduce rice production across Asia, where 90% of the world’s rice is grown and consumed. The road to normalization of rice exports from India will be long, due to policy uncertainty and firmness in local prices despite the trade restrictions. There are concerns that other major rice producers and exporters, such as Thailand and Vietnam, the second and third-largest rice exporters accounting for 16% and 15% of global market share, respectively, could emulate India and impose similar bans on rice exports, which would further drive up world rice prices.[97] Thailand has expressed concerns about drought conditions in 2024, while some growing regions in India and China — the world’s largest rice producer and consumer — might be at risk of drought. Thailand and Vietnam have sought to take advantage of the market situation to increase supplies to countries like the Philippines (the world’s second-largest importer of rice), Indonesia (sixth-largest importer) and Japan. On the other hand, experts are concerned that when the ban is lifted, the global market could be flooded with Indian rice, should there be a major market overcorrection. View Source

Consumer Experiences

Consumer experiences around the usage and consumption of commodities in India are varied and reflect the broader trends in the market:

Oil: Consumers have benefited from lower fuel prices due to discounted Russian crude oil imports, although there are concerns about the environmental impact and the need for a transition to greener alternatives 14 15.

Gas: The increased reliance on LNG has led to more stable gas supplies for households and industries, but consumers are wary of potential price fluctuations due to global market dynamics 16.

Grains: The shift from being a net exporter to a net importer of corn has led to higher prices for corn-based products, affecting both consumers and the poultry industry. Additionally, rice export restrictions have caused domestic rice prices to surge, impacting household budgets 17 18.

Green Fuel Alternatives: There is growing consumer interest in green fuel alternatives like hydrogen and electric vehicles, driven by government initiatives and the promise of reduced long-term costs and environmental benefits 19.

Ethanol Blending: The government's push for ethanol blending in gasoline has been well-received, as it promises to reduce fuel costs and dependency on crude oil imports. However, this has also led to increased demand and prices for corn, affecting food prices 20 21.

These experiences highlight the complex interplay between government policies, global market trends, and consumer impacts in India's commodities sector.

14: (MENAFN) In July, India outpaced China to become the leading importer of Russian oil, according to recent data on global oil shipments. This shift highlights India’s growing role in the global oil market as Moscow adjusts its energy export strategies in response to Western sanctions imposed due to the conflict in Ukraine.India's crude oil imports from Russia surged to a record 2.07 million barrels per day (bpd) in July, which represents 44 percent of the country’s total oil imports. This figure marks a 4.2 percent increase from June and a 12 percent rise compared to the same month the previous year. The surge is attributed to significant discounts offered by Russia, which has been redirecting its energy exports away from Western markets as part of its broader response to the sanctions.In contrast, China's oil imports from Russia via pipelines and shipments fell to 1.76 million bpd in July, according to Chinese customs data. The decrease in China’s purchases is linked to lower profit margins from refining fuels, which has reduced the attractiveness of Russian crude for Chinese refiners.Since February 2022, following the imposition of Western sanctions on Russia, Indian refiners have increasingly turned to discounted Russian oil. This trend has altered the traditional flow of Russian ESPO (Eastern Siberia–Pacific Ocean) Blend crude, shifting it from its primary market in China to South Asia. In July, imports of ESPO Blend to India rose to 188,000 bpd, facilitated by the use of larger Suezmax vessels.An Indian refining source indicated that India’s demand for Russian oil is expected to continue growing, provided there are no additional sanctions tightening. The shift in the global oil trade reflects broader geopolitical and economic adjustments as countries navigate the implications of the ongoing conflict and associated sanctions. View Source15: Union Transport Minister Nitin Gadkari highlighted the challenges of reducing India's crude oil imports by 25% at the BloombergNEF summit. He emphasised the potential for green fuel, particularly hydrogen, and aimed for India to become a leading manufacturer of lithium-ion batteries and green-fuel automobiles. Gadkari noted that India's low production costs would attract automobile companies and reduce import dependency. View Source16: He expects the share of LNG in India's gas mix to increase from 48% in fiscal 2024 to 50% in the current financial year. Since India's domestic gas production is expected to start moderating from fiscal 2028, the country's reliance on LNG would further rise as India looks to increase the share of natural gas in the energy mix, he said. View Source17: A surge in domestic demand for corn in India has sharply curtailed exports and led to record imports for TY 2023/24 (Oct-Sep). Driving factors for this rise in demand include government ethanol policy and a growing poultry market. Historically, India has been a net exporter that supplies significant volumes of corn to South and Southeast Asia. For the first time since 1999/00, India will import as much corn as it exports. View Source18: In September 2023, USDA reported that global rice export prices had peaked to the highest levels in 15 years due to rice export restrictions imposed by India (on non-Basmati white rice, covering 75-80% of Indian rice exports) in July 2023 (including a 20% export duty on parboiled rice).96 Prices began rising in 2022, following floods in Pakistan — the world’s fourth-largest rice exporter (Table 5) — which impacted global supply. Rice is a water-intensive crop, and an earlier-than-usual El Niño in the 2023 season was forecast to reduce rice production across Asia, where 90% of the world’s rice is grown and consumed. The road to normalization of rice exports from India will be long, due to policy uncertainty and firmness in local prices despite the trade restrictions. There are concerns that other major rice producers and exporters, such as Thailand and Vietnam, the second and third-largest rice exporters accounting for 16% and 15% of global market share, respectively, could emulate India and impose similar bans on rice exports, which would further drive up world rice prices.[97] Thailand has expressed concerns about drought conditions in 2024, while some growing regions in India and China — the world’s largest rice producer and consumer — might be at risk of drought. Thailand and Vietnam have sought to take advantage of the market situation to increase supplies to countries like the Philippines (the world’s second-largest importer of rice), Indonesia (sixth-largest importer) and Japan. On the other hand, experts are concerned that when the ban is lifted, the global market could be flooded with Indian rice, should there be a major market overcorrection. View Source19: Union Transport Minister Nitin Gadkari highlighted the challenges of reducing India's crude oil imports by 25% at the BloombergNEF summit. He emphasised the potential for green fuel, particularly hydrogen, and aimed for India to become a leading manufacturer of lithium-ion batteries and green-fuel automobiles. Gadkari noted that India's low production costs would attract automobile companies and reduce import dependency. View Source20: A surge in domestic demand for corn in India has sharply curtailed exports and led to record imports for TY 2023/24 (Oct-Sep). Driving factors for this rise in demand include government ethanol policy and a growing poultry market. Historically, India has been a net exporter that supplies significant volumes of corn to South and Southeast Asia. For the first time since 1999/00, India will import as much corn as it exports. View Source21: For the first time this century, India will likely be a net importer of corn this trade year ending this month. “The largest shift in India’s grains trade is for corn. In 2023-24, India is on pace to lose its position as a net exporter for the first time this century,” the USDA said. View Source

Sources

1: (MENAFN) In July, India outpaced China to become the leading importer of Russian oil, according to recent data on global oil shipments. This shift highlights India’s growing role in the global oil market as Moscow adjusts its energy export strategies in response to Western sanctions imposed due to the conflict in Ukraine.India's crude oil imports from Russia surged to a record 2.07 million barrels per day (bpd) in July, which represents 44 percent of the country’s total oil imports. This figure marks a 4.2 percent increase from June and a 12 percent rise compared to the same month the previous year. The surge is attributed to significant discounts offered by Russia, which has been redirecting its energy exports away from Western markets as part of its broader response to the sanctions.In contrast, China's oil imports from Russia via pipelines and shipments fell to 1.76 million bpd in July, according to Chinese customs data. The decrease in China’s purchases is linked to lower profit margins from refining fuels, which has reduced the attractiveness of Russian crude for Chinese refiners.Since February 2022, following the imposition of Western sanctions on Russia, Indian refiners have increasingly turned to discounted Russian oil. This trend has altered the traditional flow of Russian ESPO (Eastern Siberia–Pacific Ocean) Blend crude, shifting it from its primary market in China to South Asia. In July, imports of ESPO Blend to India rose to 188,000 bpd, facilitated by the use of larger Suezmax vessels.An Indian refining source indicated that India’s demand for Russian oil is expected to continue growing, provided there are no additional sanctions tightening. The shift in the global oil trade reflects broader geopolitical and economic adjustments as countries navigate the implications of the ongoing conflict and associated sanctions. View Source2: Union Transport Minister Nitin Gadkari highlighted the challenges of reducing India's crude oil imports by 25% at the BloombergNEF summit. He emphasised the potential for green fuel, particularly hydrogen, and aimed for India to become a leading manufacturer of lithium-ion batteries and green-fuel automobiles. Gadkari noted that India's low production costs would attract automobile companies and reduce import dependency. View Source3: He expects the share of LNG in India's gas mix to increase from 48% in fiscal 2024 to 50% in the current financial year. Since India's domestic gas production is expected to start moderating from fiscal 2028, the country's reliance on LNG would further rise as India looks to increase the share of natural gas in the energy mix, he said. View Source4: He expects the share of LNG in India's gas mix to increase from 48% in fiscal 2024 to 50% in the current financial year. Since India's domestic gas production is expected to start moderating from fiscal 2028, the country's reliance on LNG would further rise as India looks to increase the share of natural gas in the energy mix, he said. View Source5: For the first time this century, India will likely be a net importer of corn this trade year ending this month. “The largest shift in India’s grains trade is for corn. In 2023-24, India is on pace to lose its position as a net exporter for the first time this century,” the USDA said. View Source6: A surge in domestic demand for corn in India has sharply curtailed exports and led to record imports for TY 2023/24 (Oct-Sep). Driving factors for this rise in demand include government ethanol policy and a growing poultry market. Historically, India has been a net exporter that supplies significant volumes of corn to South and Southeast Asia. For the first time since 1999/00, India will import as much corn as it exports. View Source7: In September 2023, USDA reported that global rice export prices had peaked to the highest levels in 15 years due to rice export restrictions imposed by India (on non-Basmati white rice, covering 75-80% of Indian rice exports) in July 2023 (including a 20% export duty on parboiled rice).96 Prices began rising in 2022, following floods in Pakistan — the world’s fourth-largest rice exporter (Table 5) — which impacted global supply. Rice is a water-intensive crop, and an earlier-than-usual El Niño in the 2023 season was forecast to reduce rice production across Asia, where 90% of the world’s rice is grown and consumed. The road to normalization of rice exports from India will be long, due to policy uncertainty and firmness in local prices despite the trade restrictions. There are concerns that other major rice producers and exporters, such as Thailand and Vietnam, the second and third-largest rice exporters accounting for 16% and 15% of global market share, respectively, could emulate India and impose similar bans on rice exports, which would further drive up world rice prices.[97] Thailand has expressed concerns about drought conditions in 2024, while some growing regions in India and China — the world’s largest rice producer and consumer — might be at risk of drought. Thailand and Vietnam have sought to take advantage of the market situation to increase supplies to countries like the Philippines (the world’s second-largest importer of rice), Indonesia (sixth-largest importer) and Japan. On the other hand, experts are concerned that when the ban is lifted, the global market could be flooded with Indian rice, should there be a major market overcorrection. View Source8: In September 2023, USDA reported that global rice export prices had peaked to the highest levels in 15 years due to rice export restrictions imposed by India (on non-Basmati white rice, covering 75-80% of Indian rice exports) in July 2023 (including a 20% export duty on parboiled rice).96 Prices began rising in 2022, following floods in Pakistan — the world’s fourth-largest rice exporter (Table 5) — which impacted global supply. Rice is a water-intensive crop, and an earlier-than-usual El Niño in the 2023 season was forecast to reduce rice production across Asia, where 90% of the world’s rice is grown and consumed. The road to normalization of rice exports from India will be long, due to policy uncertainty and firmness in local prices despite the trade restrictions. There are concerns that other major rice producers and exporters, such as Thailand and Vietnam, the second and third-largest rice exporters accounting for 16% and 15% of global market share, respectively, could emulate India and impose similar bans on rice exports, which would further drive up world rice prices.[97] Thailand has expressed concerns about drought conditions in 2024, while some growing regions in India and China — the world’s largest rice producer and consumer — might be at risk of drought. Thailand and Vietnam have sought to take advantage of the market situation to increase supplies to countries like the Philippines (the world’s second-largest importer of rice), Indonesia (sixth-largest importer) and Japan. On the other hand, experts are concerned that when the ban is lifted, the global market could be flooded with Indian rice, should there be a major market overcorrection. View Source9: Union Transport Minister Nitin Gadkari highlighted the challenges of reducing India's crude oil imports by 25% at the BloombergNEF summit. He emphasised the potential for green fuel, particularly hydrogen, and aimed for India to become a leading manufacturer of lithium-ion batteries and green-fuel automobiles. Gadkari noted that India's low production costs would attract automobile companies and reduce import dependency. View Source10: He expects the share of LNG in India's gas mix to increase from 48% in fiscal 2024 to 50% in the current financial year. Since India's domestic gas production is expected to start moderating from fiscal 2028, the country's reliance on LNG would further rise as India looks to increase the share of natural gas in the energy mix, he said. View Source11: He expects the share of LNG in India's gas mix to increase from 48% in fiscal 2024 to 50% in the current financial year. Since India's domestic gas production is expected to start moderating from fiscal 2028, the country's reliance on LNG would further rise as India looks to increase the share of natural gas in the energy mix, he said. View Source12: A surge in domestic demand for corn in India has sharply curtailed exports and led to record imports for TY 2023/24 (Oct-Sep). Driving factors for this rise in demand include government ethanol policy and a growing poultry market. Historically, India has been a net exporter that supplies significant volumes of corn to South and Southeast Asia. For the first time since 1999/00, India will import as much corn as it exports. View Source13: In September 2023, USDA reported that global rice export prices had peaked to the highest levels in 15 years due to rice export restrictions imposed by India (on non-Basmati white rice, covering 75-80% of Indian rice exports) in July 2023 (including a 20% export duty on parboiled rice).96 Prices began rising in 2022, following floods in Pakistan — the world’s fourth-largest rice exporter (Table 5) — which impacted global supply. Rice is a water-intensive crop, and an earlier-than-usual El Niño in the 2023 season was forecast to reduce rice production across Asia, where 90% of the world’s rice is grown and consumed. The road to normalization of rice exports from India will be long, due to policy uncertainty and firmness in local prices despite the trade restrictions. There are concerns that other major rice producers and exporters, such as Thailand and Vietnam, the second and third-largest rice exporters accounting for 16% and 15% of global market share, respectively, could emulate India and impose similar bans on rice exports, which would further drive up world rice prices.[97] Thailand has expressed concerns about drought conditions in 2024, while some growing regions in India and China — the world’s largest rice producer and consumer — might be at risk of drought. Thailand and Vietnam have sought to take advantage of the market situation to increase supplies to countries like the Philippines (the world’s second-largest importer of rice), Indonesia (sixth-largest importer) and Japan. On the other hand, experts are concerned that when the ban is lifted, the global market could be flooded with Indian rice, should there be a major market overcorrection. View Source14: (MENAFN) In July, India outpaced China to become the leading importer of Russian oil, according to recent data on global oil shipments. This shift highlights India’s growing role in the global oil market as Moscow adjusts its energy export strategies in response to Western sanctions imposed due to the conflict in Ukraine.India's crude oil imports from Russia surged to a record 2.07 million barrels per day (bpd) in July, which represents 44 percent of the country’s total oil imports. This figure marks a 4.2 percent increase from June and a 12 percent rise compared to the same month the previous year. The surge is attributed to significant discounts offered by Russia, which has been redirecting its energy exports away from Western markets as part of its broader response to the sanctions.In contrast, China's oil imports from Russia via pipelines and shipments fell to 1.76 million bpd in July, according to Chinese customs data. The decrease in China’s purchases is linked to lower profit margins from refining fuels, which has reduced the attractiveness of Russian crude for Chinese refiners.Since February 2022, following the imposition of Western sanctions on Russia, Indian refiners have increasingly turned to discounted Russian oil. This trend has altered the traditional flow of Russian ESPO (Eastern Siberia–Pacific Ocean) Blend crude, shifting it from its primary market in China to South Asia. In July, imports of ESPO Blend to India rose to 188,000 bpd, facilitated by the use of larger Suezmax vessels.An Indian refining source indicated that India’s demand for Russian oil is expected to continue growing, provided there are no additional sanctions tightening. The shift in the global oil trade reflects broader geopolitical and economic adjustments as countries navigate the implications of the ongoing conflict and associated sanctions. View Source15: Union Transport Minister Nitin Gadkari highlighted the challenges of reducing India's crude oil imports by 25% at the BloombergNEF summit. He emphasised the potential for green fuel, particularly hydrogen, and aimed for India to become a leading manufacturer of lithium-ion batteries and green-fuel automobiles. Gadkari noted that India's low production costs would attract automobile companies and reduce import dependency. View Source16: He expects the share of LNG in India's gas mix to increase from 48% in fiscal 2024 to 50% in the current financial year. Since India's domestic gas production is expected to start moderating from fiscal 2028, the country's reliance on LNG would further rise as India looks to increase the share of natural gas in the energy mix, he said. View Source17: A surge in domestic demand for corn in India has sharply curtailed exports and led to record imports for TY 2023/24 (Oct-Sep). Driving factors for this rise in demand include government ethanol policy and a growing poultry market. Historically, India has been a net exporter that supplies significant volumes of corn to South and Southeast Asia. For the first time since 1999/00, India will import as much corn as it exports. View Source18: In September 2023, USDA reported that global rice export prices had peaked to the highest levels in 15 years due to rice export restrictions imposed by India (on non-Basmati white rice, covering 75-80% of Indian rice exports) in July 2023 (including a 20% export duty on parboiled rice).96 Prices began rising in 2022, following floods in Pakistan — the world’s fourth-largest rice exporter (Table 5) — which impacted global supply. Rice is a water-intensive crop, and an earlier-than-usual El Niño in the 2023 season was forecast to reduce rice production across Asia, where 90% of the world’s rice is grown and consumed. The road to normalization of rice exports from India will be long, due to policy uncertainty and firmness in local prices despite the trade restrictions. There are concerns that other major rice producers and exporters, such as Thailand and Vietnam, the second and third-largest rice exporters accounting for 16% and 15% of global market share, respectively, could emulate India and impose similar bans on rice exports, which would further drive up world rice prices.[97] Thailand has expressed concerns about drought conditions in 2024, while some growing regions in India and China — the world’s largest rice producer and consumer — might be at risk of drought. Thailand and Vietnam have sought to take advantage of the market situation to increase supplies to countries like the Philippines (the world’s second-largest importer of rice), Indonesia (sixth-largest importer) and Japan. On the other hand, experts are concerned that when the ban is lifted, the global market could be flooded with Indian rice, should there be a major market overcorrection. View Source19: Union Transport Minister Nitin Gadkari highlighted the challenges of reducing India's crude oil imports by 25% at the BloombergNEF summit. He emphasised the potential for green fuel, particularly hydrogen, and aimed for India to become a leading manufacturer of lithium-ion batteries and green-fuel automobiles. Gadkari noted that India's low production costs would attract automobile companies and reduce import dependency. View Source20: A surge in domestic demand for corn in India has sharply curtailed exports and led to record imports for TY 2023/24 (Oct-Sep). Driving factors for this rise in demand include government ethanol policy and a growing poultry market. Historically, India has been a net exporter that supplies significant volumes of corn to South and Southeast Asia. For the first time since 1999/00, India will import as much corn as it exports. View Source21: For the first time this century, India will likely be a net importer of corn this trade year ending this month. “The largest shift in India’s grains trade is for corn. In 2023-24, India is on pace to lose its position as a net exporter for the first time this century,” the USDA said. View Source