GRMs fall 20% MoM in Jun-11

Jun-11 GRMs decline by 20% MoM: Gross Refining Margins for the local refineries declined by 20% MoM to clock in at USD4.27/bbl during Jun-11. Lower than expected Arab light average price published by Opec for May-11 raised our May-11 GRMs to USD5.33/bbl (16%↑). On YoY basis GRMs were significantly up by 23% YoY. Except for HSFO, decline in POL prices outpaced oil prices by 3%, which led to lower MoM GRMs

MoM lower naphtha & MS spread dragged Jun-11 GRMs: Naphtha witnessed the biggest drop in its spread against crude to reach USD-7.74/bbl, lowest level since Dec-08. MS spread also decline by USD1.76/bbl during Jun-11, due to cheaper MS imports by PSO. FO deficit improved by USD1.33/bbl MoM, primarily due to lower supply in the region.

Lower listed refineries’ GRMs: Amongst the listed refineries NRL’s GRM declined by 18% MoM to clock in at USD5.87/bbl, whereas ATRL’s GRM was down by 26% MoM to USD3.81/bbl. PRL remained the major loser with 48% MoM decline in Jun-11 GRM, which averaged USD0.74/bbl.

Jun-11 GRMs decline by 20%

Gross Refining Margins for the local refineries declined by 20% MoM to average USD4.98/bbl during Jun-11. Lower than expected Arab light average price publish by Opec for May-11 raised our May-11 GRMs by 16% to USD5.33/bbl. On YoY basis GRMs were significantly up by 23% YoY during Jun-11. MS ex-refinery prices are estimated at PKR60.24/liter, which is PKR0.9/liter higher than that derived by using old formula. Had the GoP continued to price MS using unitary penalty adjustment, Jun-11 GRMs would have been lower by USD0.28/bbl. Except for HSFO, POL prices decline outpaced oil prices by 3%, leading to lower MoM GRMs.

MoM lower naphtha & MS spread dragged June-11 GRMs

Naphtha spread during Jun-11 declined significantly to USD-7.56/bbl, lowest level since Dec-08, primarily due to oversupply in the region. MS spread turned negative during Jun-11, at USD-0.42/bbl, primarily due to likely cheaper MS imports by PSO. Mogas ex-refinery price for June-11 translated into a RON rating of 88.4 against 91 in May-11 using unitary RON penalty mechanism. HSD spread also declined by 3% MoM as most of the refineries recommenced production after the maintenance period, thus increasing the supply of the product. FO deficit, on the other hand, witnessed some improvements where its spread improved by USD1.33/bbl MoM to USD-14/bbl, partially offsetting the impact of lower naphtha and MS spreads.

Lower listed refineries’ GRMs

Amongst the listed refineries, NRL’s GRM declined by 18% MoM to clock in at USD5.87/bbl, whereas ATRL’s GRM was down by 26% MoM to USD3.81/bbl. PRL remained the major loser with 48% MoM decline in Jun-11 GRM, which averaged USD0.74/bbl. On YoY basis, NRL’s GRM was up by a respectable 24%YoY, due to robust middle distillate performance which comprises 54% of its product slate, followed by ATRL with 16% YoY increase. PRL’s GRMs was down by 23% YoY.

Economic & Political News

Forex reserves decline to USD17.47bn

Country’s foreign exchange reserves have declined to USD17.47bn in the week ending on June 25, 2011, as compared to USD17.52bn last week, data released by the State Bank of Pakistan said Thursday.

Govt intends to float fresh short-term NSS

The government is considering to introduce short-term National Savings Schemes (NSS) products for a year and below. The NSS product maturities are across three to 10 years with profit rates ranging from 13.20% to 15.36%. The federal government in a prelude announced Thursday that rates of return on already running NSS would remain unchanged.

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