KARACHI: Oil sales in March plunged to more than a decade low of one million tons as fuel consumption tanked 29 percent year-on-year and fell seven percent month-on-month in the novel coronavirus-induced lockdown and consumers’ shift to Iranian substitute, an equity brokerage reported on Thursday.
Arif Habib Limited said sales of oil marketing companies (OMCs) for the month of March 2020 clocked in at 1.03 million tons, lowest monthly sales since 2006.
OMCs’ sales in March were down from 1.1 million tons in February 2020, and plummeted from the sales of 1.46 million tons in March 2019, the brokerage said, citing the official data.
“Despite more working days in March compared to February, demand for petroleum products has significantly gone down due to enforcement of lockdown by provincial governments to limit spread of coronavirus along with excessive availability of illegal fuel dumped from Iran and lower reliance on furnace oil (FO) for power generation,” analyst Arsalan Hanif at Arif Habib Limited said.
On yearly basis, sales of FO, high speed diesel (HSD) and motor spirit (MS) witnessed a steep decline of 63 percent, 32 percent and 15 percent to 0.07 million tons, 0.39 million tons and 0.55 million tons, respectively.
As per the market sources, oil consumption during the last 10 days of March witnessed a massive decline of 50 percent vis-à-vis the first 20 days of the month.
“If the lockdown is extended beyond April 14, then this may have serious repercussions for April sales,” Hanif said. On a monthly basis, FO sales dropped 53 percent, while HSD and MS volumes grew 4 percent and 1 percent.
“We expect demand for FO to remain at similar level in upcoming months due to higher availability of power from cheaper sources.”
During the 9MFY20 period (July 2019 to March 2020), total white and black oil sales clocked in at 12.28 million tons, depicting a decline of 10 percent due to dip in sales volumes of HSD and FO by 15 percent and 26 percent, respectively.
“Despite continuous increase in vehicle population, MS sales witnessed meager growth of 1 percent to 5.55 million tons in nine months due to improved availability of compressed natural gas in all four provinces and higher prices of MS by an average of 20 percent.
HSD sales shrunk 15 percent to 4.6 million tons led by sharp slowdown in agriculture sector, negative growth of 3.4 percent in the large scale manufacturing sector, higher HSD price and availability of smuggled HSD from Iran, which is cheaper in contrast to officially imported product, according to the Arif Habib Limited.