BARRON'S ASIA

December 23, 2015, 10:33 P.M. ET

 

India: The New King Of Gasoline
By Shuli Ren


India is under-appreciated in its capacity to consume gasoline, according to Macquarie
Research.


Gasoline demand is soaring in India, rising 110 kb/d, or 25% from a year ago in
September, the fastest pace in over a decade. Total gasoline demand rose 15% on
average in 2015 through November.


In the future, we will only see more gasoline-fueled cars on India’s busy streets. Earlier
this month, to battle pollution, New Delhi, which accounts for over 7% of total passenger
vehicle sales in India, issued an interim ban on diesel vehicle registrations.


Passenger vehicle sales in India rose 14% this year and gasoline vehicle sales as a
proportion of total sales have climbed from 38% in 2011 to 62% in 2015. ” Consumer
preference has shifted in India from diesel to gasoline vehicles due to the removal of
diesel subsidies”, said Macquarie analyst Vikas Dwivedi.


As a result, Macquarie thinks India gasoline demand will grow annually 75-125 kb/d
between 2016 and 2018. The bank remains “constructive on the US and global refining
sector”. The bank has a Buy rating on Delek US (DK), Holly Frontier (HFC), PBF Energy
(PBF), Tesoro Corp. (TSO) and Valero Energy (VLO).


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