MoGas sales continue exhibiting resilience towards macroeconomic headwinds, posting an increase of 4% YoY to 4.56mn MT during 7MFY20 against 4.27mn MT recorded during 7MFY19. We believe converging price parity between MoGas and CNG played a key part in compelling vehicle users to switch back to MS as their primary fuel source. On a company-wise basis, HASCOL posted a growth of 11% MoM to 57kT during Jan20, a contrast to industry trend, while PSO’s Market Share took top spot registering at 39%.

HSD sales depicted vulnerability to macro-economic slowdown with sales of 3.84mn MT during 7MFY20 against 4.25mn MT posted during 7MFY19. We believe a 6% YoY decline in LSM coupled with a general slowdown in economic activity contributed towards the commodity’s decline. On a monthly basis, HSD sales fell by 13% MoM to 0.48mn MT likely due to the transporter’s strike, which resulted in a considerable decline in cross-country shipment. On a company-wise basis, HASCOL once again defied industry trends by posting a growth of 8% MoM to 47KT while PSO nabbed the top spot with a market share of 43% during Jan’20.

While the yearly trend depicts FO off-take falling by 23% YoY to 1.39mn MT, monthly trend reveals a reversal in the commodity’s fortunes with an increase of 88% MoM. FO sales have picked pace throughout the board resulting from a considerable decline in the commodity’s price post the implementation of the IMO2020. We have witnessed notable FO-based plants inch up the merit-order list particularly NCPL and HUBC’s Narowal Plant with their rankings standing at 24 and 26, respectively. Moreover, Jan’20’s FO off-take was further amplified by exports of BYCO as the company sold 59kT of the commodity as opposed of sales of 14kT in the preceding month.

We maintain our Positive stance on the OMC sector as the inflation-hedged, cyclical industry is set to benefit from reviving economic fundamentals. (BMA Capital Management Ltd.)