India's LPG sales fall 12.1% as supply tightens and Morbi turns to propane

India's LPG sales fell 12.1% in October from a year earlier, and 14.5% over April to October, according to monthly fuel sales data reported by The Economic Times on 1 November¹. Diesel sales rose 11.7% in the same month and petrol 3.1%, so the drop in cooking fuel is not part of a broad slowdown in demand¹.

The Economic Times said LPG sales have fallen since the Iran war began and that supplies have tightened¹. Kpler expects India's LPG demand to fall by around 100,000 barrels a day (b/d) in 2026². It said disruption in the Strait of Hormuz affected roughly 90% of India's LPG imports.

Rationing, price and piped gas

Kpler said the supply shock fed directly into end-use consumption as the government introduced measures including the rationing of LPG deliveries². It did not set out how that rationing was split between households and commercial users.

For households, an unchanged price points away from cost as the main driver. The 14.2-kg domestic cylinder has stayed at Rs 942, while the 19-kg commercial cylinder is revised on the first of every month³. Piped gas is also taking share. PPAC counted 1,76,89,278 domestic PNG connections as of 31 August and 3,266.72 lakh active domestic LPG connections on 1 October⁵. Kpler expects part of the lost LPG demand to be structural as piped natural gas spreads².

For commercial buyers the price signal is direct. The 19-kg cylinder rose Rs 10 to Rs 2,820 on 1 November, from Rs 2,810 on 1 October³. Monthly revisions went up at each step since September: Rs 9.50 on 1 September, then Rs 62.50 on 1 October, then Rs 10³. That follows cuts of Rs 183.50 in July and Rs 192 in August, after prices climbed Rs 1,373 per cylinder between February and June to a record Rs 3,113.50³. The November price is still below that record³.

The same revision raised jet fuel by Rs 1.37 a litre to Rs 138.50, the fourth consecutive monthly increase³. India imports roughly half of its natural gas and LPG, and a significant share of LPG comes from Gulf producers that ship through Hormuz³.

Morbi shows how fast a fuel switch can happen

Morbi, one of India's main ceramic tile clusters, is the clearest example of demand moving to another fuel. Varmora Granito has 80% of its plants back on propane after supplies dried up in March, its chairman and managing director Bhavesh Varmora told BusinessLine⁴. The company can run on either propane or natural gas and chooses on availability and relative cost⁴.

Propane is priced at around Rs 92 per standard cubic metre (SCM), the unit used for gas, against about Rs 85 for Gujarat Gas natural gas⁴. Propane carries more heat per unit, around 11,110 against 8,300 to 8,400, so which fuel is cheaper depends on consumption and efficiency⁴. Morbi's makers buy propane from Indian Oil, Bharat Petroleum and Aegis⁴.

Kajaria Ceramics told investors that propane prices rose twice in the preceding 15 days, including a Rs 12.5 per SCM rise over two to three days⁴. Natural gas fell Rs 5.5 per SCM over the same period. That left propane about 5% cheaper on Kajaria's comparison, but the company expects further increases and sees no clear path down⁴.

"The gas situation will be tough going forward. Spot prices have gone up significantly in the international market," Kajaria management said⁴.

Morbi natural gas went from about Rs 50 per SCM on 28 February to about Rs 85⁴. Kajaria raised tile prices 18-19% in Morbi and 12-13% at its northern and southern plants, while increases across the cluster were estimated at 30-40%⁴. An estimated 40-50% of the cluster's 500-odd units are not operating⁴.

Propane is not a safe harbour

Propane supply is tightening too. S&P Global Platts assessed US Gulf Coast propane at $1.0925 a gallon on 22 October, one of the highest levels since September 2022⁶. US propane exports have held above 2 million b/d over the last four weeks, and propane and propylene stocks fell to 105.846 million barrels, the lowest since early August⁶.

The propane-to-crude ratio was about 46%, on par with a year earlier, so propane is high in absolute terms without being unusually expensive against crude⁶.

India's sourcing has already moved. US Ambassador to India Sergio Gor said the US share of India's LPG imports rose from under 10% to 67% over the past year, making it the largest supplier⁷. India is also among the biggest buyers of US butane, used to replace barrels lost with the Hormuz closure, Platts reported⁶.

What to watch

Brent spot was $123.10 a barrel on 27 October, up 6.8% from a week earlier and 100.7% since the start of the year⁸.

Kpler expects LPG demand to recover from its second and third quarter lows in the fourth quarter on the festival season and higher imports, but says the recovery will be incomplete². It forecasts growth of only around 60,000 b/d in 2027, or slightly more than half of the 2026 decline². Diwali falls on 8 November this year, so any festival lift will show in November sales rather than October's⁹.

The October numbers are an early read on the month. PPAC's monthly ready reckoner, which publishes official monthly fuel sales data, still shows September as the latest month⁵.