Pakistan Energy: No denying, FO is dying, (AKD Daily, Dec 20, 2019)
- Nov’19 HSFO 180CST prices have dipped further (down 17%MoM) continuing an already tremendous decline (-32.5%CYTD/44.6%YoY) taking its refining crack against Arab Light to US$29.3/bbl, blowback from impending IMO 2020 restriction and a clear dampener for mid-stream profitability
- Additionally, this fall in HSFO prices has largely overridden PkR devaluation impact on grid generation costs, where a further slide would further curtail the difference in cost of generation between FO and RLNG, a trend we have highlighted is already in terms of captive power capacity
- HSD/MS were trading marginally higher (+0.2%/+4.1%MoM) while cracks for the same exhibited a downward trend (HSD/MS cracks moved -28%/-16%MoM to US$8.2/3.3/bbl) resting below 5MFY20 averages of US$10.8/3.4/bbl, where improvements are expected during 1QCY20
- Calm on this front is likely to act as a catalyst for physical crude draws with early-December OPEC+ agreement adding further impetus to bullish expectations, where the 1.7 million bpd cut from January through March, should support cracks for HSD and MS.
- In this regard we remain upbeat on E&Ps (OGDC in particular) which are clear beneficiaries from higher crude benchmarks, while refineries appear to be clear losers. From a wider scope, select cement (LUCK, DGKC, CHCC) and OMCs (APL and PSO with steady FO industrial supply arrangements) are likely to benefit as well.
Lucky Cement is a cement manufacturing and distribution company which is based in Pakistan. Co. is engaged in the manufacture and sale of Ordinary Portland, Sulphate Resistant, and Slag Cement. Co.'s brand names included Lucky Cement, Lucky Star, Lucky Gold, Chairman, and Lucky Sulphate Resistant Cement. Co. maintains production facilities in Pezu (Production capacity: 13,000 tons per day) as well as in Karachi (Production capacity: 8,000 tons per day). In addition, Co. is engaged in developing export markets for bulk loose cement from Pakistan to the Gulf Countries, African Markets, and Far East Region including Nepal & Sri Lanka.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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