POL Sales in Nov 2023: No Respite in Sight for OMCs

Staff Report

POL sales witnessed a consecutive 17th month of YoY decline, dipping 11% (↑9% MoM) to 1.4 million tons in November 2023.

This decline can be attributed to elevated retail prices of MS/HSD, increased inflow of Iranian fuel, and an economic slowdown.

During 5MFY24, total sales clocked in at 6.4mn tons (↓16% YoY). A product-wise breakdown reveals a decline of 15/3/40% YoY in MS/HSD/FO sales, respectively, during Nov’23. Company-wise analysis depicts that PSO/APL/SHEL volumes slipped 12/9/19% YoY.

Sales declined across all categories: Domestic petroleum sales (ex-non-energy) declined 11% YoY in Nov’23, while a 9% surge was witnessed sequentially due to a decline in petroleum prices and favorable agricultural activities. Ogra Proposes imprisonment up to 10 Years for Illegal Oil Storage and Sale

Product-wise analysis reveals that MS/HSD sales decreased 15/3% YoY (↓/↑2/16% MoM) due to:

Elevated MS/HSD retail prices (avg. of Rs282/299/ltr respectively in Nov’23)

Increased inflow of Iranian fuel through informal channels

Continuing economic slowdown amid all-time-high interest rates and high inflation

In the black oil segment, FO sales clocked in at 82K tons during Nov’23, down 40% YoY (↑54% MoM), depicting lower demand from power producers amid a higher proportion of RLNG, coal, nuclear, and hydel generation.

This is because the cost of generating electricity on FO at Rs38.7/unit was the highest compared to all other fuels (avg. fuel price: Rs11.4/unit).

Company Analysis

PSO

In Nov’23, PSO‘s sales volume clocked in at 715K tons, ↓12% YoY. MS/HSD sales volume clocked in at 259/369K tons, ↓10/13% YoY in Nov’23.

Whereas, FO sales fell 43% YoY during Nov’23 amid lower demand from the power sector. Sequentially, sales surged 14% given a 4/17% increase in MS/HSD, whereas FO sales underwent an increase of 4.4x due to the onset of winter.

Overall, PSO’s market share declined 0.3ppts YoY to 52.1%. The market share of MS improved 2.6ppts YoY to 45%, whereas the HSD/FO market share shrank 6.5/1.5ppts to 57/28% in Nov’23.

APL

APL recorded an overall decline of 9% YoY (↓2% MoM) during Nov’23 as its petroleum sales clocked in at 121K tons.

Product-wise analysis reveals that sales of MS/HSD were down 1/1% YoY (↓2/1% MoM) in Nov’23, while FO sales decreased 43% YoY (↓4% MoM).

However, APL’s market share in MS/HSD improved by 1/0.2ppts YoY to 9/8% in Nov’23, while the share of FO declined by 1ppts YoY to 18%.

SHEL

During Nov’23, SHEL’s volumes clocked in at 93K tons, ↓19% YoY (↑2.9% MoM). MS/HSD sales declined 20/16% YoY (↑1/7% MoM). Whereas, SHEL’s market share of MS/HSD fell by 1/1ppt to 10/6% in Nov’23.

HASCOL

HASCOL’s sales grew 34% YoY (↓21% MoM) in Nov’23 to 32K tons, driven by a 3.3x YoY growth in HSD sales. While MS volumes fell 13% YoY in Nov’23. Its market share of MS/HSD was up by 0.1/2ppts YoY to 3/2%.

Analysts expect demand for petroleum products to remain subdued amid elevated fuel prices and a slowdown in economic activity despite a favorable base effect.

However, we maintain an outperform stance on the sector due to expected improvement in cashflows,” Foundation Research said in a statement.