OMC sales up by 2% YoY in Sept’20 on increased FO demand from IPPS

October 02, 2020 (MLN): The total industry sales volumes for Oil Marketing Companies (OMCs) during 1QFY21 witnessed an increase of 8% YoY to 4.74 MTs as compared to 4.39 MTs recorded in the corresponding period of FY20.

In the month of September alone, the sales of petroleum products stood at 1.52 MTs, showing a decrease of 2% MoM while industry sales volume improved by 2% YoY.

The YoY meagre growth in Fuel demand, according to the report by Aba Ali Habib Securities, was mainly on the back of increased demand for Furnace Oil (FO) by the power sector, up by 58% YoY, as the winter season approaches along with dwindling gas undersupply.

As per research by Darson Securities, High Octane Blending Component (HOBC) sales volume rose by 88% YoY as a result of the introduction of Euro V fuel. However, High-Speed Diesel (HSD) and Motor Spirit (MS) taped a yearly decline of 14% and 1% respectively amid economic slowdown from the pandemic.

On a sequential basis, sales volumes of MS and HSD, both registered a decline of 8% MoM. On the other hand, demand for furnace oil jumped by 20% MoM due to competitive power generation cost and looming gas shortage.

During 1QFY21, overall industry volume surged due to volumetric growth of 28%, 7%, and 6% in FO, HSD, and MS respectively.

Company-wise, APL posted the highest growth of 31%, MoM, in sales of petroleum products in September 2020 among its peers due to 90% and 14% increase in FO and HSD sales respectively. While sales of PSO dropped by 7% MoM on an account of weak demand for MS (down by 13% MoM). On the other hand, Shell reported a meagre growth of 1% MoM in sales, mostly contributed by an uptick in MS volume, reported by Aba Ali Habib's research.

During 1QFY21, HASCOL led the charts by posting a 12% YoY increase in total sales of petroleum products, contributed by a 52% growth in MS sales.

On the market share front, PSO grabbed the largest market share of 46% in September 2020, down by 1pps MoM, while the market share of SHEL and HASCOL declined to 7% and 4% from 8% and 5% respectively. On the other hand, BYCO increased its market share to 6%.

Going forward, as per IGI research, the volumetric growth of MS and HSD will remain healthy due to winter and harvesting season, however, a price hike for Jul/Aug 2020 is likely to keep a lid on sales improvement. FO sales are likely to remain upbeat in the coming month due to higher demand from IPPs as Hydel generation slows down during the winter season.

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