Floods Starve Indias Lube Sales


Lubricants sales have dropped approximately 40 percent in north and central India, partly due to monsoon flooding during July and August, according to regional lube dealers.

Drought in some parts of the region have hampered agricultural and industrial activities while heavy rains have destroyed homes and devastated economic activity in other parts, causing concern to lubricant traders throughout the area.

Natures fury has severely impacted lubricants trade in Uttar Pradesh and [neighboring states Uttarakhand and Bihar], said Amit Srivastava, of Kanpur-based Silver Lubricants. On one hand, Central U.P., which commands the lubricant trade of eastern and western U.P. and neighboring states of Bihar and Uttaranchal, is facing drought, due to which agriculture activities have come to a standstill, thereby lubricants demand is on the downside. On the other hand, floods have inundated other regions of the states leaving thousands homeless and causing severe setback to the agriculture activities. According to Silver Lubricants estimates, slowdown in agricultural activities has caused a slump in lubricants demand, reducing consumption in agricultural segments by 35 percent.

Further aggravating the problem is the Supreme Court of Indias ban on mining activities due to which transportation and constructing works have come to a standstill. With the mining and transportation segments being major consumers of lubricants, the slump in demand has caused 50 percent declines in industrial and transport lubricants sales, Srivastava told Lube Report Asia.

Demand has come down to such an extent that lubricant prices are at all-time low in some areas of Uttar Pradesh said Ashok Singh, a lubricant trader. Major multinational and Indian companies have been forced to sell their products at a heavy discount to clear off their backlogs. Valvoline is offering discounts on its lubricants, along with Apar Industries and Savita Oil, Singh said. Even Indias public sector companies Indian Oil and Hindustan Petroleum are offering discounts on their products.

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