India's Refined Sunflower Oil Demand Set to Fall 10% Amid Supply Chain Disruptions and Rising Prices

New Delhi, April 2: India's demand for refined sunflower oil is expected to decline by around 10 percent in the current fiscal year, as supply chain disruptions and climbing prices push consumers toward more affordable alternatives. This is according to a new report released by Crisil Ratings, which outlines the structural pressures weighing on one of the country's key edible oil segments.

The Crisil Ratings report attributes the volume decline to two primary headwinds: ongoing supply chain disruptions stemming from the West Asia conflict, and significantly higher logistics costs that are making refined sunflower oil increasingly expensive at the retail level. Together, these forces are expected to shift consumer preferences toward cheaper substitutes such as rice bran oil and soybean oil.

As stated in the report, Indian refined sunflower oil volume is poised to decline by approximately 10 percent in the current fiscal year, driven by twin headwinds that will suppress demand. Despite this expected drop in volumes, revenues of oil refiners are projected to remain relatively flat over the course of the year. Higher prices are likely to compensate for the reduction in demand, allowing companies to maintain their top lines even as they sell less product.

India's sunflower oil industry is structurally vulnerable to global disruptions because it is heavily reliant on imports of crude sunflower oil. A significant share of these imports originates from Ukraine and Russia, two countries currently embroiled in geopolitical conflict. The ongoing tensions have forced shipping vessels to take longer detour routes, most notably around the Cape of Good Hope, which has substantially increased both transit times and freight costs.

Beyond longer shipping routes, vessels passing through conflict-adjacent regions are also contending with elevated war-risk insurance premiums.

This has further pushed up the landed cost of crude sunflower oil for Indian refiners, making it increasingly difficult to keep retail prices competitive.

As a result of these compounding cost pressures, retail prices of refined sunflower oil have risen to approximately Rs 170 to Rs 175 per litre, compared to around Rs 140 to Rs 145 per litre in January 2026. In contrast, rice bran and soybean oils are currently priced Rs 10 to Rs 20 per litre cheaper, a differential that is expected to drive a meaningful partial shift in consumer demand toward these lower-cost alternatives.

Refined sunflower oil currently accounts for around 12 to 14 percent of India's total edible oil consumption, which stands at approximately 25 to 26 million tonnes annually. Even a 10 percent volume decline in this segment would represent a notable shift in the country's edible oil consumption landscape, with downstream implications for importers, refiners, and distributors alike.

On the profitability front, the Crisil report offers a more reassuring picture. Margins for sunflower oil refiners are expected to remain broadly stable despite the volume decline. Refiners have demonstrated the ability to pass on price increases to consumers, albeit with a lag of around 10 to 15 days. Additionally, companies have put in place strong hedging mechanisms to manage commodity price risks, which provides a buffer against sudden cost spikes.

The report also highlighted a notable inventory trend: stock levels with domestic refiners have been steadily declining since the onset of the geopolitical conflict. While this could tighten near-term supplies, it may simultaneously lead to a temporary release of working capital, which in turn could support cash flows for these businesses in the short run.

Crisil's analysis of nine sunflower oil refiners that it currently rates — companies that together account for approximately 70 percent of the industry, which has an estimated revenue base of Rs 36,000 crore — concluded that strong balance sheets will help these players maintain stable financial profiles despite the challenges they currently face. The overall outlook for the sector, while pressured on the volume side, remains manageable from a financial resilience standpoint.