Despite lockdown being extended for the entire month by provincial and federal governments to limit spread of Coronavirus, demand for petroleum products increased by 3 percent on month-on-month basis due to surge in sales of HSD on account of higher demand from agriculture sector given beginning of wheat harvesting season and closure of Iran border resulting in lower availability of illegally dumped fuel.
Pertinently, sales of FO, MS and HSD witnessed a steep decline of 75 percent, 36 percent and 16 percent on YoY to 0.07 million tons, 0.44 million tons and 0.55 million tons, respectively. As per market sources, oil consumption witnessed a rising trend since the government opted for a "smart lockdown" and issued Standard Operating Procedures (SOP) for construction and export oriented industries. However, if lockdown is extended (deadline is 9th May'20) then this will be negative for May'20 sales.
On a monthly basis, MS sales dropped by 21 percent while HSD and FO volumes grew by 41 percent and 2 percent respectively. "We expect demand for FO to increase in upcoming months due to higher demand of power in summer season coupled with historic low prices (FO touched $77/MT on 22nd April'20) which may improve merit order of furnace oil based power plants," an analyst at Arif Habib Limited said.
During the first 10 months of Y20, total White and Black Oil sales clocked-in at 13.35 million tons, depicting a decline of 13 percent due to dip in sales volumes of MS, HSD and FO by 3 percent, 15 percent and 31 percent, respectively. Motor Gasoline sales witnessed a meager decline of 3 percent to 5.99 million tons due to the Coronavirus. However, massive reduction in price will increase demand as customers will prefer petrol over Compressed Natural Gas (CNG). High Speed Diesel (HSD) sales shrunk by 15 percent to 5.15 million tons led by sharp slowdown in Agriculture sector, negative growth of 3.03 percent in the manufacturing sector of LSM and availability of smuggled HSD from Iran, which is cheaper in contrast to official imported product. Meanwhile, FO is being replaced by other sources namely Coal, Hydel and RLNG, resulting in a decline of 31 percent on YoY to 1.68 million tons compared to 2.44 million tons in the same period last year.