Pakistan Commodities - Energy commodities recede, (AKD Daily, Mar 17, 2023)
Energy commodities recede
International coal prices have plummeted recently, touching the lowest level since
Jan’22, prices currently hovering at US$132.7/ton vs. US$155/239 per ton CYTD/2QFY23.
This is largely being driven by warmer-than-expected winters in Europe and the resulting
stock buildup. On the local front, coal prices (Darra) are currently at PkR38-40k/ton
Brent prices have receded by 7.6% in the past four trading sessions, with the decline in
prices largely coming as a spillover effect of the banking crisis. Following the Silicon Valley
Bank and Credit Suisse incidents, investor fears for a 2008-09 financial crisis like situation
started taking a toll on crude oil prices.
As per our calculations, a US$5/ton movement lower in coal prices would lead to AKD
Cement universe’s FY24 earnings being higher by PkR2.2bn or 3.6%. Our base case for the
cement sector incorporates coal prices at US$130/ton for FY24 and US$120/ton thereafter.
Southward movement in crude oil prices is expected to provide a breather to Pakistan’s
import bill, with the petroleum group making up ~29.4% of total imports in 7MFY23. Furthermore,
assuming no change in cracking spreads, a drop in oil prices would lead to lower
petroleum products prices. However, this would reduce the revenue generation of E&P
companies.
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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