March 2, 2021 (MLN): Following a strong start to a new year, the upturn in the sales of Petroleum and Lubricants continues, as the total sales volume of the Oil and Marketing Companies (OMCs) increased by 26% YoY to record 1.4 MTs in the month of February’21 as compared to 1.11 MTs in the same month last year.
While on monthly basis, the total industry volume declined by 8% MoM from 1.51 MTs in January’21.
According to the report by Arif Habib Limited, the YoY growth in industry’s sales volume is primarily attributable to resilience displayed by the economy and ensuing demand for MS, higher sales of HSD on the back of better agricultural yields, and cheaper HSD and MS prices compared to the same period last year. Moreover, massive growth in two/three/four-wheeler offtake, strict control on borders to curb the supply of illegal or dumped fuel from Iran, and increasing MS demand due to the absence of CNG at fuel stations also contributed to YoY growth in OMCs sales volume.
During the month, HSD volumes witnessed robust growth of 47% YoY owing to an ongoing crackdown against HSD smuggling and an uptick in economic activity. The demand for MS and FO also remained strong as their sales witnessed double-digit growth of 14% YoY and 22% YoY in Feb’21. The increase in FO sales was attributed to LNG curtailment to the power sector while the upsurge in MS sales can be attributed to improvement in domestic travel with fading winters.
On monthly basis, the decline was largely owing to a decline in FO sales by 40% YoY as gas supply improved with rising temperature.
Cumulatively, during 8MFY21, the overall sales of petroleum products increased by 13% YoY to 12.67 MTs as opposed to 11.24 MTs in the corresponding period last year. The major contribution to growth during the period came from HSD and FO as their offtake surged to 4.84 MTs and 2.09 MTs, up by 15% YoY and 36% YoY against 4.21 MTs and 1.54 MTs respectively in the same period last year.
Company-wise, PSO emerged as the best performer and posted volumetric growth of 58% YoY in Feb’21 contributed by strong FO sales (up by 1.9x YoY). This was followed by SHEL which registered a growth of 33% YoY mostly contributed by strong HSD sales which witnessed a growth of 58% YoY.
However, APL and HASCOL posted a decline of 16% and 45% YoY respectively.
With regards to market share, PSO continued to grab the largest market share of 46% for Feb’21, up by 9PPts MoM, while SHEL continued to maintain a stable market share at 9%.
On the other hand, the share of HASCOL, BYCO, and APL dropped to 3%, 6%, and 8%, marking a decline of 4%, 3%, and 5% MoM respectively.
With regards to the outlook of the Oil and Marketing Industry, Fortune securities underlined that with the winter season waning away and a substantial curb in the smuggling of grey products, strong sustenance of retail fuel demand over the short-medium term is expected.
Moreover, FO demand is expected to waver during the summer season after gas resumption to industries post-winter season.
With regards to pricing, the recent stumble in international oil prices is a good sign for Pakistan as it provides room for GoP to increase the quantum of PDL without increasing retail prices, the report said.
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