Bilgesu Erdem
Trade body Solvent Extractors Association of India (SEA) recently highlighted a significant increase in India’s edible oil imports. With a projection of 17 million tonne (MT) for the current oil year, there’s a notable uptick from the 14 MT recorded last year. These imports primarily consist of palm, soybean, and sunflower oils. The global price drop, attributed to factors such as increased domestic demand and reduced import duties, seems to be behind this growth.
A pronounced surge was observed in palm oil imports from nations like Indonesia, Malaysia, and Thailand. From November to September of the current oil year, there was an impressive 29% increase, reaching 9.8 MT. Palm oil now claims a 59% stake in India’s total edible oil imports.
However, SEA voiced concerns regarding the rising imports of refined palmolein oil, emphasizing its potential detriment to domestic refining capacities. Despite substantial domestic availability, a fall in local edible oil prices has bolstered demand, leading to increased per capita consumption.
During the same period, soybean and sunflower oil imports marked 38.87 MT and 1.79 MT, sourced predominantly from Argentina, Brazil, Russia, and Ukraine.
Interestingly, there’s been a decline in landed prices for palm oil, soybean, and sunflower oil. Factors like the ‘oil and fats’ category experiencing a 14.04% deflation last month compared to the previous year are of note. This trend also holds true for retail mustard oil prices and refined oil rates.
Stock Market Recovers Amidst Varied Factors
Equities showcased recovery, with heavyweights driving the rally, coupled with stock-specific movements spurred by the earnings season. BSE Sensex and NSE Nifty50 closed the week on a positive trajectory, despite initial setbacks from IT results.
Crude oil prices appeared to remain steady, even in the wake of political tensions such as the Israel-Hamas conflict. Market analysts like Ambareesh Baliga lauded the market’s resilience, with indices bouncing back from gaps down. Meanwhile, Ashutosh Mishra, from Ashika Stock Broking, anticipates further positivity in the market, emphasizing robust earnings and steady domestic flows.
Positive quarterly sales data drove the realty sector, while the Supreme Court’s involvement in adjusted gross revenue recalculation offered some respite to telecom operators.
Positive Outlook for Downstream Oil Marketing Companies
ICICI Securities shared an optimistic view about the gross refining margins for downstream oil marketing companies (OMCs). The ongoing demands in transportation fuels and petrochemical inputs underline this sentiment. Nonetheless, the retail prices of petrol and diesel remain pivotal for OMCs’ quarterly outcomes. The pricing methodology of OMCs, based on a 15-day rolling average, has seen no updates since last April, due to the spike in global crude prices.
Despite positive indicators, OMCs faced challenges as crude prices peaked at $97 a barrel, causing substantial under-recoveries.
India’s evolving edible oil import scene and stock market fluctuations offer intricate insights into the nation’s economic dynamics. Meanwhile, downstream OMCs hold promise, albeit with challenges. As global tensions and domestic factors interplay, understanding these dynamics becomes pivotal for future strategies.
