Pakistan OMC's: HSD slump the 'most unkindest cut of all'
- March'19 OCAC data for POL sales (1.45mn tonnes +1%MoM/-18%YoY), dampened by expectedly subdued FO sales (185Ktons +8%MoM/-50%YoY) and unexpectedly persistent in HSD sales (0.58mn tonnes -2%MoM/-21%YoY) extending declines for this core retail fuel segment (1QCY19 HSD sales volumes down 16.4%YoY).
- Cumulative 9MFY19 industry sales amount to 13.56mn tonnes (-26%YoY) with two out of three major segments (FO/HSD sales down 59/20%YoY) firmly lower, while MOGAS offtake flat lined (+1%YoY), setting a low base before the start of seasonally high POL sales volumes (2-3Q CY)
- Amongst major downstream players, the absence of growth was profound (PSO/APL/HASCOL/SHEL MaRch 19 volumes -11/-25/-49/-7%YoY) pressing 9MFY19 cumulative volumes (-46/-4/-25/-10%YoY) even lower
- PkR depreciation and unwavering Arab Light prices should keep a lid on discretionary sales, where MOGAS/HSD sales may be headed into a particularly tough summer, taming any expectations of volumetric sales growth
- Shifting focus to re-investment and CAPEX plans following circular debt resolution, we believe PSO can fortify retail fuel market share by effective mid-stream investments, while trimmed transport costs (transporting HSD through rail) and improved domestic upliftment are long term operational safeguards.
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