Energy products push import bill in Nov 2021
News Report
Energy products have pushed import bills to record high during the month of November 2021.
Pakistan Bureau of Statistics (PBS) released figures which showed that energy products, agriculture/chemicals, and machinery groups contributed most to the 24%MoM increase in Nov’ 21 import bill.
Imports during the Nov’ 21 ballooned to US$7.9bn whereas exports clocked in at US$2.9bn, widening the trade deficit during the month to US$5bn.
We believe imports will revert back to their pre-Nov 21 figures from next month as one-off volumetric inflows of petroleum products and medicinal items will likely decline.
We expect easing international commodity prices i.e., crude, LNG to reduce the quantum of import bills as well, Sherman securities said.
Imports jump 24%MoM on higher petroleum, pharma volumes
The PBS breakdown showed imports of petroleum products jumped to multi-year high levels (volume and value) amid high international crude prices.
Petroleum group imports for Nov’ 21 clocked in at US$2.2bn compared to US$1.6bn during Oct’ 21, posting an increase of US$0.54bn during the month under review.
Imports of medicinal items (which includes Covid-19 vaccines) rose to US$0.7bn compared to US$0.3bn during Oct’ 21, contributing US$0.4bn to the MoM increase.
In addition, machinery group imports crossed the US$1bn mark during the month on account of higher electrical and telecom imports.
Meanwhile, exports during the month witnessed robust growth of 18%MoM to US$2.9bn on account of high textile, food, and other manufacturers’ exports.
5MFY22 import bill reaches US$33bn; trade deficit at US$20.7bn
On a year-on-year basis, cumulative imports during the 5MFY22 remained more pronounced due to the low base effect and high international commodity prices.
Major YoY change was seen in petroleum and transport groups which increased by 113%YoY and 127%YoY respectively to US$8.4bn and US$1.9bn.
Imports of petroleum products during 5MFY22 clocked in at 7.62m MT compared to 5.9m MT during the same period last year.
During the same period, the average price increased by 76% to around US$67/bbl from US$38/bbl during 5MFY21.
Furthermore, low-interest rates and pent-up demand in the auto sector during the 5MFY22 also increased the CKD/SKD imports under the transport group during the ongoing fiscal year.
We expect the trade deficit to reach US$41bn by the end of FY22 from US$20.7bn booked so far during the July-Nov period.
We believe imports of petroleum products will decline from Dec’ 21 as the local inventories are already at their peak levels. it said.
Moreover, declining oil prices will be visible from Jan’ 21 onwards.
As per our estimates, a US$10/bbl decrease in crude oil prices will reduce the import bill by 12%.
However, we have already incorporated a 10% reduction in crude oil prices for the remaining 2HFY22.
