As per provisional data, OMC sales declined by 31% yoy (down 9% mom) to 1.0mn tons during March 2020. Even excluding Furnace oil (FO), petroleum consumption was down 26% yoy. This is the sharpest yoy decline during the past two years amid economic slowdown, where recent government measures to curb the Covid-19 outbreak exacerbated the decline. Schools were closed and a countrywide lockdown stalled most industrial and commercial activity.

Industry HSD sales fell 33% yoy in March 2020, while Mogas (petrol) sales were down 16% yoy. On a sequential basis, however, sales of both retail fuels were flat. PSO’s overall market share improved to 38% from 37% in the previous month (with the largest pumps network). However, for the first time APL sold more FO than PSO did. SHEL (with greater urban presence) and HASCOL improved their market shares in March by c.0.7ppt mom.

During the period 9MFY20, overall industry sales declined 12% yoy (8% ex-FO). HSD sales fell 16% yoy while Mogas sales were almost flat (down 2% yoy). Mogas has overtaken HSD as the fuel with the largest sales in Pakistan. In this market, the incumbent PSO has increased its share by 3ppt yoy to 39%. HASCOL has lost the same quantum of market share, while those of APL and SHEL have been steady at 12% and 9% respectively. In the HSD market as well, PSO gained market share by 6ppt yoy to 44% during 9M.

We think OMC sales will further deteriorate in April, as the lockdown would reduce economic activity and consumption even further. Importantly, PSO consolidated its share in a declining market when product prices were rising. Going forward, demand will continue to compress for a few months until normalcy against the outbreak is reached. But, it is possible that falling prices will embolden small OMCs to offer discounts to dealers and take away market share from PSO and other major OMCs discussed here. (Intermarket Securities Limited)