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Sunflower Oil Demand in India to Drop 10% as Conflict Raises Prices

Demand for refined sunflower oil in India is projected to fall by about 10% this fiscal year due to supply disruptions from the West Asia conflict and resulting price increases. The conflict has forced longer shipping routes and higher war-risk insurance premiums, raising the landed cost of crude sunflower oil for Indian refiners. Consequently, retail prices have risen, making alternatives like rice bran and soybean oil more attractive to consumers. Despite the volume decline, refiners' revenues are expected to remain flat as higher realizations offset lower demand, with strong industry balance sheets helping maintain stable credit profiles.

Key Points: India's Sunflower Oil Demand Falls 10% on Supply Disruption

  • Supply chain disruption from West Asia conflict
  • Higher logistics & insurance costs
  • Consumer shift to cheaper oils like rice bran
  • Refiner revenues flat despite volume drop
  • Strong industry balance sheets to maintain credit
3 min read

Sunflower oil demand in India may fall 10% amid supply disruption due to West Asia conflict: Crisil

Crisil report forecasts 10% drop in India's sunflower oil demand due to West Asia conflict, higher prices, and consumer shift to cheaper oils.

"Indian refined sunflower oil volume is poised to decline ~10% in the current fiscal - Crisil Ratings"

New Delhi, April 2

Demand for refined sunflower oil in India is expected to decline by around 10 per cent in the current fiscal due to supply chain disruptions and rising prices, according to a report by Crisil Ratings.

The report said the decline in volumes will be driven by twin headwinds, disruptions in supply chains due to the ongoing West Asia conflict and higher prices resulting from increased logistics costs. These factors are likely to push consumers towards cheaper alternatives such as rice bran and soybean oils.

It stated, "Indian refined sunflower oil volume is poised to decline ~10% in the current fiscal, due to twin headwinds that will dampen demand."

Despite the expected drop in volumes, revenues of sunflower oil refiners are projected to remain flat during the year, as higher realisations are likely to offset the decline in demand.

India's sunflower oil industry is heavily dependent on imports of crude sunflower oil, making it vulnerable to global disruptions. A significant portion of imports comes from Ukraine and Russia.

The ongoing geopolitical tensions have led to longer shipping routes, with vessels now taking detours such as around the Cape of Good Hope, increasing transit time and costs.

Additionally, vessels passing through sensitive regions are facing higher war-risk insurance premiums, further pushing up the landed cost of crude sunflower oil for Indian refiners.

As a result, retail prices of refined sunflower oil have increased to around Rs 170-175 per litre, compared to around Rs 150 per litre in January 2026. In contrast, rice bran and soybean oils are currently cheaper by Rs 10-20 per litre, which is expected to lead to a partial shift in consumer demand towards these substitutes.

Refined sunflower oil accounts for around 12-14 per cent of India's total edible oil consumption of 25-26 million tonnes annually.

On the profitability front, the report said margins are expected to remain stable despite the volume decline. Refiners are able to pass on price increases to consumers, albeit with a lag of 10-15 days, and have strong hedging mechanisms in place to manage price risks.

The report also noted that inventory levels with domestic refiners have been gradually declining since the onset of the conflict, which could tighten supplies in the short term. However, this may also lead to a temporary release of working capital, supporting cash flows.

An analysis of nine sunflower oil refiners rated by Crisil, accounting for around 70 per cent of the industry revenue of Rs 36,000 crore, indicates that strong balance sheets will help maintain stable credit profiles despite current challenges.

- ANI

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Reader Comments

R
Rohit P
It's high time we focus on Aatmanirbhar Bharat in edible oils too. We import so much! Can't our agricultural policies encourage more domestic production of oilseeds? This conflict shows our vulnerability. 🇮🇳
A
Aman W
The report says refiners' revenues will remain flat. So companies are protected, but the common man bears the brunt with higher prices. Typical. 😒 Hope the shift to soybean and rice bran oil brings some relief to our monthly budget.
S
Sarah B
Living in India for 5 years now. The adaptability of local consumers is impressive. Our cook has started blending oils to manage costs. It's a practical solution many families are adopting.
V
Vikram M
The Cape of Good Hope detour adding to costs is a detail many miss. Global politics directly hits our kitchen expenses. Maybe this 10% demand drop will send a message and stabilize prices eventually.
K
Kavya N
Health-conscious consumers who preferred sunflower oil will be disappointed. But rice bran oil is also a healthy Indian alternative. Every challenge brings an opportunity to rediscover local options.

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