Oil sales hit decade-low in February

KARACHI: Oil sales dropped 23 percent year-on-year to 1.1 million tons in February, keeping up the double-digit decline in the first eight months of the current fiscal year, as consumption of all fuel products waned amid stunted economic growth, brokerage data showed on Thursday.

Ali Zaidi, an analyst at JS Global Capital said sales of petroleum products in February were the lowest monthly sales in nearly a decade. Zaidi said average February oil sales remained at 1.5 million tons between FY2010 and FY2019, at least 35 percent higher than the sales recorded last month. Likewise, last month’s HSD sales were also 28 percent lower than a monthly average observed over a decade.

High speed diesel (HSD) demand took the biggest dip in percentage terms, as its sales dropped 38 percent year-on-year to 374,000 tons in February. Sales of motor spirit (MS) fell 11 percent to 550,000 tons. Furnace oil sales decreased a quarter to 144,000 tons during the last month.

Oil sales also fell 18 percent in February over January due to dampened demand across all major fuel segments. MS sales were down 10 percent. HSD sales dropped 22 percent and furnace oil sales decreased 33 percent month-on-month.

“Ex-FO performance did not fare well as 26 percent YoY (year-on-year) and 15 percent MoM (month-on-month) decline is expected,” Fawad Basir, an analyst at Topline Research said. “The slight uptick in FO volumes was witnessed in January on a significant price decline. Since then FO prices have witnessed a gradual recovery.”

In July-February 2019/20, the only product that witnessed any sort of growth was MS whose sales inched up two percent. Its sales were more than five million tons in the period under review. However, the 13 percent decline in HSD sales and 23 percent fall in FO demand culminated in total demand falling eight percent to 11.2 million tons.

“While FO sales have been declining in Pakistan due to the ban on FO-based power generation, the fall in HSD sales implies that the economic slowdown is still very much prevalent,” Zaidi said. “Though some attrition in sales for the month had been expected after supply disruptions owing to the gas leak at Karachi Port, the actual figure is well below our expectations.”

Basir said Hascol remained the top laggard with decline in volumes by 61 percent year-on-year and 33 percent month-on-month in February. Its market share in MS and HSD shrank 430 basis points and 810 basis points year-on-year, respectively. Its market share for both the products was down 160 and 250 basis points month-on-month, respectively.

Attock Petroleum, however, gained market share in HSD and MS by 390 basis points and 120 basis points month-on-month to 13.2 percent and 10.1 percent, respectively. In February, market of Pakistan State Oil in MS declined 2.4 percent to settle at 35.4 percent. Shell managed to maintain its market share at 11.7 percent in its main MS segment.