Zubair Yaqoob
Karachi
Sales of Oil Marketing Companies for the month of Jun’20 stand at 1.62 million tons, up by 19% YoY / 9% MoM compared to 1.48 million tons in Mary20 and 1.35 million tons in Jun’19.
Despite targeted lockdown in various areas of big cities and closure of some markets, this drastic increase in demand for petroleum products is due to: Revival in domestic economic activity, three year low retail selling price resulted in hoarding to sell at higher price in July, backlog of order in anticipation of further decline in petroleum prices, surge in sales of HSD on account of higher demand from agriculture sector, massive reduction in price will increase demand as customers will prefer petrol over Compressed Natural Gas (CNG) and closure of Iran border to limit spread of Coronavirus resulting in lower availability of illegally dumped fuel.
Pertinently, sales of HSD and MS witnessed massive increase of 68% and 28% YoY to 0.75mn tons and 0.73mn tons, while FO sales dropped by 59% YoY due to lower reliance on power generation from FO based plants.
Meanwhile, MS sales in June’20 is the highest monthly sales in the country ever (20% higher than 11MFY20 average of 0.60mn tons) while HSD sales stands at 24-months high (42% higher than 11MFY20 average of 0.53mn tons).
As per market sources, white oil consumption registered historic high due to hoarding by some key players to benefit from rising oil prices (MS Ex-refinery price increased by 91% and retail price increased by 34%). However, analysts believe volumes to drop in July due to higher price difference which may allow smuggled fuel to penetrate the market.
