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Oil Prices Slip as US Supply Growth Offsets OPEC Support

Despite supportive comments from the Organization of the Petroleum Exporting Countries (OPEC), oil prices slipped slightly during the outgoing week owing to strong supply from U.S. The continuous rise in U.S oil supply is pressuring the prices offsetting the effect of strong compliance on supply cuts from members of OPEC and allies like Russia. During the outgoing week WTI, Brent, and Arab Light all declined by 1% WoW.

During the week steel sector remained mixed as international steel rebar price remained unchanged during the outgoing week. However, local rebar price increased by PKR 3,000/MT to pass on the impact of PKR devaluation. Moreover, international scrap prices continued to decline further by 3% during the outgoing week closing the week at USD 352/MT.

The week remained beneficial for cement players in North as the average price in the region increased further by PKR 8/bag. Please note, that this is a fifth rise since prices started to rebound making a cumulative increase of PKR 50/bag in some parts of the region. The price in South region however remained at PKR 566/bag which we expect may decline in the short run.

The skimmed milk powder and whole milk powder both reported a decline of 3% and 1% WoW respectively, which is beneficial for EFOOS as the company uses milk powder as a raw material. On the other hand, news over the weekend suggest that the Government is considering to levy duties on imported milk powder to protect dairy farmers, which bodes ill for EFOODS.