OMCs: Strong volumes for APL and SHEL during 3QFY11, PSO disappoints

Industry volumes up 1% YoY in 3QFY11: 3QFY11 has been an ordinary quarter for OMCs as industry’s oil volumes, based on provisional data, managed to edge up 1% YoY, helped primarily by 12% YoY growth in Feb-11, as Mar-11 volumes were up  a mere 2% YoY. Volumes for 9MFY11 fell 2% YoY.

Weak HSD demand a major drag on volumes: While lower CNG availability lifted Mogas volumes by 12% YoY in 3QFY11, with overall volumes further helped by 8% YoY growth in jet fuels, weak HSD volumes, down 5% YoY, was a major drag on overall industry’s sales. 3QFY11 FO volumes were up 3% YoY.

PSO – lackluster volume performance continues: Lackluster volume performance continued for PSO in 3QFY11 with overall volumes down 9% YoY whereas 9MFY11 volumes also fell 9% YoY. PSO’s 3Q volumes were the lowest in the last four years, mainly due to weak FO and HSD sales.

Strong Volumes for SHEL and APL: Highest ever quarterly FO and Mogas sales helped APL post 25% YoY growth in volumes during 3QFY11, despite 3% YoY decline in HSD sales. Volumes for SHEL were up 23% YoY due to 35% YoY growth in Jet Fuels and low base effect of negligible FO sales last year.

Industry volumes up 1% YoY in 3QFY11

With Mar-11 oil volumes clocking in a 2% YoY growth, 3QFY11 volume growth for OMCs settled at an unappealing 1%, helped primarily by 12% YoY growth in Feb-11. While 3QFY11 has been a roller coaster ride, with a strong Feb-11 and muted Mar-11 following a dismal Jan-11 where volumes fell 8% YoY, a close analysis reveals that base effect was behind wide swings in volume growth. Last year, Jan-10 volumes were up 14% YoY, followed by 10% YoY decline in Feb-10, while Mar-10 sales grew 3% YoY. Volumes for 9MFY11 now show a 2% YoY decline.

Weak HSD demand a major drag on volumes

While lower CNG availability, coupled with higher vehicle population and greater

consumption by electricity generators, lifted Mogas volumes by 12% YoY in 3QFY11, followed by 8% YoY growth in jet fuels, weak HSD demand continued to dampen overall industry volumes. 3QFY11 HSD volumes trimmed 5% YoY, a result of dismal economic activity. FO sales during the quarter were up 3% YoY, as improvement in systems efficiency – through higher utilization of efficient electricity generation capacities – has somewhat muted the impact of greater electricity generation on FO.

PSO – lackluster volume performance continues

Lackluster volume performance continued for PSO in 3QFY11 with overall volumes down 9% YoY with 9MFY11 also showing a similar (9% YoY) decline. PSO has posted negative YoY volume growth in four of the last five quarters, posting the lowest 3Q volumes in the last four years during 3QFY11, and market share on a continuous decline since 4QFY10. 3QFY11 market share for PSO (energy products) stood at 62%, 9pp lower than 71% during 4QFY10. Weak volumetric growth for PSO is primarily because of lower HSFO volumes as electricity generation mix of the country is moving away from the inefficient govt. owned capacities which purchase FO from PSO. Recently commenced FO based private sector power plants procure their furnace oil from either of SHELL or APL (along with some unlisted OMCs as well) – both witnessing stellar FO volumes recently. While PSO’s FO market share plunged to 73% in Feb-11 (3QFY11: 75%), it recouped to 78% in Mar-11, as higher mercury would likely have stepped up power demand and subsequently the utilization levels at govt. owned power generation capacities.

Strong volumes for SHEL and APL

Highest ever quarterly FO and Mogas sales helped APL post 25% YoY growth in volumes during 3QFY11, despite 3% YoY decline in HSD sales. APL’s FO sales witnessed 62% YoY rise whereas Mogas volumes were up 102% YoY. Volumes for SHEL were up 23% YoY due to 35% YoY growth in Jet Fuels and growth of 7x in FO sales due to low base effect of negligible sales last year.

Economic & Political News

CPI inflation up by 14.2%

The CPI inflation soared by 14.20% during July-March period of 2010-11 over the same period of last year, reflecting a strong trend of increase in food prices, according to Federal Bureau of Statistics (FBS). Official figure of Consumer Price Index (CPI), released by the FBS at a news briefing, showed 1.48% increase in the monthly inflation in March 2011 over previous month, and 13.16% over the same month of last year.
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