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Informist, Thursday, Apr. 2, 2026

 

NEW DELHI – Consumption of refined sunflower oil in India is poised to decline 10% in the ongoing financial year, as the twin headwinds of supply-chain disruptions triggered by the West Asia conflict and higher prices resulting from the pass-through of increasing logistics costs dampen demand, Crisil Ratings said in a release.

 

This is likely to lead consumers to switch to cheaper substitutes such as rice bran and soybean oils. Revenues of sunflower oil refiners are, however, expected to remain flat during the year, as higher realisations would offset the drop in volumes, the agency said. Their profitability should also remain stable as gains from previously acquired low-cost inventory largely offset negative operating leverage from the volume dip, it said. 

 

Increasing crude oil prices and supply-side bottlenecks will tighten inventory levels of domestic sunflower oil refiners in the short term. That said, it would also lead to a temporary release of working capital, aiding cash flows. Moreover, strong balance sheets will help keep their credit profiles stable, as per the release. The agency has based this on an analysis of nine sunflower oil refiners, accounting for 70% of the industry revenue of INR 360 billion.

 

Refined sunflower oil accounts for 12–14% of India's annual edible oil consumption of 25–26 million tonnes. The industry depends heavily on imports of crude sunflower oil, making it vulnerable to global trade disruptions and geopolitical developments.

 

According to the release, a large portion of the imports is from Ukraine and Russia. "With the ongoing conflict in West Asia, vessels are taking longer routes, such as around the Cape of Good Hope, increasing voyage distance and transit time," it said. Moreover, for vessels passing through conflict-sensitive regions, war-risk insurance premiums have risen. "Consequently, the landed cost of crude sunflower oil for Indian refiners has increased," it said.

 

Since the West Asia conflict began, the average import price of sunflower crude oil has risen to $1,420– $1,440 per tonne, compared with $1,275 per tonne on an average in the trailing 12 months, Jayashree Nandakumar, director of Crisil Ratings, said. A weakening Indian rupee and higher shipping costs are further increasing the landed cost of crude sunflower oil in India, she said.

 

According to Crisil Ratings, the increase in sunflower crude cost would eventually translate into higher retail prices of refined sunflower oil. Retail prices of refined sunflower oil are currently at INR 170-175 per litre, against INR 150 per litre in January. Moreover, as rice bran and soyabean oils are currently trading at a discount of INR 10-INR 20 per litre to sunflower oil, the agency sees a partial shift towards these substitutes. 

 

Despite the drop in volumes, profitability of refiners would stay firm given the ability to pass on price increases to end consumers, albeit with a lag of 10-15 days. Also, refiners have firm hedging policies in place to avoid downside price risks, it said. Counting in the price gains from the low-cost inventory which will largely offset negative operating leverage arising from the volume dip, the agency sees operating margins of players stable at 4.8-5%.

However, a prolonged disruption could tighten supplies further and exert pressure on prices and procurement strategies, according to the release.  End

 

US$1 = INR 92.87

 

Reported by Pallavi Singhal

Edited by Avishek Dutta

 

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