As per provisional data, overall OMC sales in August 2020 grew 21% yoy but slowed 7% mom to 1.55mn tons. Excluding furnace oil (FO), sales growth was lower at 12% yoy. Sales of Mogas (petrol) and HSD (diesel) were up 10% and 25% yoy in August, while FO sales rebounded 71% yoy (up 31% mom) possibly due to higher power generation on FO and rising usage by industries for captive power (courtesy economical prices relative to RLNG). The sequential decline in sales is attributed to August being a slow month and heavy rains towards the end of month.

The factors for yoy sales growth in retail fuels (Mogas and HSD) remained the same: (i) lower prices (down 12% and 20% yoy, respectively), (ii) closed Iranian borders disrupting smuggled supplies, and (iii) recovery in overall economic activity (as depicted by HSD sales). Sales of high-octane gasoline or HOBC rose 66% yoy (doubled yoy) as prices of the deregulated fuel fell from exorbitant levels earlier (thanks to a government crackdown and commencement of euro-5 imports).

In August, cumulative market share of the four OMCs we track (PSO, APL, SHEL and HASCOL) continued to decline. PSO’s share in Mogas / HSD shrunk from 49%/59% in June 2020 to 43%/48% in August; but the levels in June were unusually high and were expected to normalize (PSO’s share fell 2-3ppt mom). SHEL’s share remained broadly intact as compared to the levels during lockdown months, but both APL and HASCOL have lost 2-3ppt share in the retail fuels since May. Notably, Total-Parco had the second largest share in retail fuels in August; and another OMC, Go, sold more fuel than both APL and HASCOL.

This is the third month since the lifting of lockdown by mid-May that sales of retail fuels have depicted double digit yoy growth, even though prices have reverted to above PKR100/liter levels. The growth in HSD is particularly impressive and indicates a pickup in industrial activity – notably construction materials and textile exports – in our view. But the strong growth rates are also because of low-base from last year (when pump prices had peaked). We expect yoy growth rates to normalize in the coming months (also softer demand during winter). (Intermarket Securities Limited.)