OMCs’ sales grow by 19% MoM in March but risks ahead

April 05, 2022 (MLN): The total sales of Oil and Marketing Companies (OMCs) witnessed an upsurge of 19% MoM and 23% YoY to clock in at 1.82 million tons during March 2022.

This takes 9MFY22 growth of 15% YoY to 16.27mn tons.

This sequential increase in demand is majorly attributed to higher offtake from FO-based plants due to the start of the summer season, capping of HSD and Mogas prices (PM’s Relief Package), and greater working days and increased economic activity compared to February 2022.

Product-wise, HSD sales rose by 17% MoM to 0.69mn tons, after a decline of 20% mom in the previous month, on reduced HSD prices and demand from the Power and Agriculture sectors. Furnace oil (FO) sales increased by 27% MoM to 0.28mn tons; this could partly be because of higher intake from IPPs amid an increase in consumption due to the change in season. Mogas sales also witnessed an increase of 19% MoM to 0.77mn tons, led by higher automotive sales in the last few months, while PM’s Relief Package on prices further elevated demand, Rahul Hans at Intermarket Securities said.

Company-wise analysis showed that Pakistan State Oil (PSO) led the volumetric growth chart as its sales grew by 28% MoM/ 38% YoY to clock in at 953 thousand tons. Product-wise, FO and HSD recorded healthy growths of 53% and 28% respectively on an MoM basis.

This is followed by SHEL and APL with a growth of 12% and 9% MoM, respectively. On the other hand, HASCOL posted negative growth of 50% in the month of March 2022.

With regards to market share, PSO grabbed the largest market share of 52% in the month of March, up by 4ppt MoM, largely due to a higher share in the FO market. On the other hand, SHEL’s market share contracted 0.4ppt to 7.9%, with the drag coming from HSD. APL’s overall share reduced by 0.8ppt to almost 9% as it lost its share in the FO, HSD and Mogas markets.

The elevated volumes in the months of March were due to the capping of prices of Mogas and HSD and the resumption of demand from the Power sector. Going forward, however, if the prices of Mogas and HSD normalize to market levels (e.g., with the end of the PM’s Relief Package), the demand for petroleum products may take a hit, the IMS report noted.

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