Lahore - Pakistan oil sales during 1HFY19 witnessed sharp decline of 32 percent YoY due to lower Furnace Oil (FO) sales. Excluding FO, volumes significantly went down by 15 percent YoY, highest in last decade. After FO, largest decline was seen in HSD, which fell 22 percent YoY due to availability of smuggled Iranian diesel and slowdown in economy, where Large Scale Manufacturing (LSM) activities in Pakistan are down 0.65 percent in 4MFY19.

Motor Spirit (MS) sale was down 2 percent YoY during 1HFY19 after posting growth for 9 consecutive years. Lower MS oil sales could be attributed to rise in petrol prices by around 24 percent YoY.

During Dec 2018, oil sales plummeted by 27 percent (ex FO: -18 percent YoY) amidst aforementioned reasons. Company wise PSO remained worst performer with drop of around 49 percent in its sales volume, followed by Hascol (-46 percent YoY). Attock Petroleum (APL) surprised by posting growth 9 percent YoY in its volumes, where its MS/HSD volumes were up 47 percent/24 percent YoY during Dec 2018.

In white oil sales, especially in HSD/MS oil sales, HASCOL’s performance was depressed as it witnessed decline of 50 percent YoY in HSD/MS cumulative sales while APL’s volumes in the same period are up 34 percent YoY.

Likewise, urea sales during Dec 2018 was expected around 710k tons, taking 2018E sales to 5.86mn tons, down 1 percent YoY.

The stagnant urea sales fell short of the expectations as growth of 2 percent was expected YoY in urea sales during 2018. Below expected sales during 2018 were on back of water shortage in some areas of Pakistan.

During Dec 2018, National Fertilizer Marketing Company (NFML) also sold around 25k tons of urea against imports of 105k tons. Similarly, FatimaFert and Agritech sales volumes are expected at around 50k and 39k, respectively. Both Companies cumulatively produced around 60k tons of urea.

Company wise, EFERT is likely to outperform industry by posting growth of 13 percent YoY in Dec’18, while its peers FFC and FATIMA are likely to show drop of 29 percent and 27 percent, respectively. Closing inventory of urea during Dec 2018 is expected around 170k tons.