ET Now: Fuel demand seems to be back to pre-Covid levels. Do you think this recovery is sustainable?
MK Surana: As far as the quarter is concerned compared to last year, it was definitely quite a good recovery. We had almost 36% growth in petrol, 22% in diesel and about 118% growth in ATF.
But as you are aware, last year’s first quarter was in the lockdown period. If we compare it with 2019, petrol has shown growth even above that, while diesel is still around 10% lesser.
So overall, demand is picking up. In petrol, we should end the year with positive growth. Diesel will just about match the pre-pandemic level if everything goes well and the third wave does not impact much. As for ATF, we need to see whether the aviation sector opens up, and to what extent.
There has been a sharp improvement in GRM. Is this sustainable, and can you build on these GRM levels?
That is correct. Petrol cracks had improved, it is in the range of around $10. Diesel cracks also picked up and it has come to around $7 compared to earlier.
Therefore, the Singapore benchmark GRMs which had gone to negative territory earlier have increased. Apparently, spot GRM are in the range of around $3.3 and the same trend is seen in the GRMs of Indian refineries as well. HPCL GRM in the first quarter had been around $3.3.
Going forward, we expect the cracks to be strong with the demand picking up and inventories getting depleted. The ramp-up of the refineries will take some time in the overseas world and the hurricane season again will be coming up in U,S so we expect cracks to be strong. That should augur well for GRMs.
The diesel cracks are improving. As Indian refineries are more diesel-dominant, their GRM should also improve.
What are the utilisation levels at your refineries currently?
We did shut down our Mumbai refinery in the first quarter to complete the revamp jobs for Mumbai refinery expansion project. It was a very complex revamp. We had decided to go in even though the second wave did challenge us. We pulled it off and we have completed that part now. The project will be getting commissioned this month.
