Oct-11 GRMs decline marginally; OMC margins reach promised levels

Oct-11 GRMs declined marginally: Gross refining margins for the local refineries declined to USD5.39/bbl in Oct-11, down 7% MoM. We have restated Sept-11 GRMs, increasing it by USD0.9/bbl, based on actual Arab Light price available for Sept-11.

Light distillates pare down Oct-11 GRMs: Light distillates were the only drag on Oct-11 GRMs, owing to decline in MS and naphtha spreads. MS spread was massively down by 92% MoM (USD0.42/bbl) mainly due to cheap imports by PSO, whereas naphtha deficit widened by USD3.43/bbl to average USD-8.44/bbl. In contrast, a limited decline in gasoil prices, led to 4% MoM expansion of its spread. Furthermore, tight supply condition led to a marginal improvement of USD2.2/bbl in FO deficit, which clocked in at USD-9.23/bbl.

ATRL’s GRM witnessed the largest decline: Amongst the listed refineries, ATRL’s Oct-11 GRM registered the highest decline of 14% MoM to USD4.84/bbl, whereas NRL’s GRM was down by 5% to USD6.62/bbl. PRL’s GRM clocked in at USD2.52/bbl during Oct-11.

OMC margins revised up to the promised levels: GOP has revised up OMC margins for MS/HSD by PKR0.16/0.14, to the committed level of PKR1.98/1.76 per liter. GOP had approved staggered increase in MS/HSD margin by PKR0.48/0.41 per liter on 26 August 2011.

Oct-11 GRMS declined marginally

Oct-11 gross refining margins for the local refineries declined to USD5.39/bbl, down 7% MoM. Due to one month lag pricing, Oct-11 GRMs will determine Nov-11 profitability for the local refineries. Lower than expected Arab Light prices for Sept-11 led to USD0.91/bbl increase in our Spet-11 GRMs, which have now been revised to USD5.81/bbl.

Light distillates pare down Oct-11 GRMs

5% MoM decline in light distillates outpaced the reduction in crude oil prices of 3% MoM, thus leading to 7% MoM decline in Oct-11 GRMs. Amongst the light distillates, MS spread witnessed a noteworthy decline of 92% MoM (USD0.42/bbl) primarily due to cheap imports by PSO. Nov-11 ex-refinery prices of MS at PKR58.6/liter (exclusive of incidentals) implied a RON rating of a mere 84 as against 87 allowed earlier (pre deregulation). Owing to weak demand from petrochemical complexes amid trough margins, naphtha deficit further widened by USD3.92/bbl to USD-8.44/bbl during Oct-11.

Amongst middle distillates, expectation of high heating oil demand from West during winter led to a limited decline of 1.4% MoM in gasoil prices during Oct-11, despite of ebbed demand from top buyers (India and Indonesia). Gasoil spread widened by 4% MoM to USD13.38/bbl, during Oct-11. Furthermore, FO discount to crude oil witnessed a marginal improvement of USD2.2/bbl to USD-9.23/bbl, due to tight supply condition on the back of lack of inflows from the west.

ATRL’s GRM witnessed the largest decline

With 35% of its product slate comprising of light distillates, ATRL’s GRM registered the highest decline of 14% MoM to average USD4.84/bbl. While 28% of NRL’s products slate comprises of light distillates, it GRM was 5% down MoM to USD6.62/bbl. PRL’s GRM averaged at USD2.52/bbl during Oct-11.

OMC margins revised up to the promised levels

3rd and final stage of increment in OMC margins has been implemented on 1 November 2011, where OMC margins for MS/HSD have been revised up PKR0.16/0.14 per liter. With that increase, OMC margins for MS/HSD have now arrived at the promised level of PKR1.98/1.76. GOP had allowed a staggered increase in MS/HSD margin by PKR0.48/0.41 in an ECC meeting held on 26 of August 2011.

As per the November price announcement, decline in ex-refinery prices has been largely offset by the increment in petroleum development levy, as has been the case in the preceding month. MS/HSD ex-refinery prices for Nov-11 were down by PKR4.58/1.36 per liter, compared to PKR1.54/0 per liter cut in their Ex-Depot prices. PDL on MS and HSD has been increased by 46% MoM and 3% MoM respectively. While PDL on HOBC and LDO remained unchanged.

Economic & Political News

July-October tax collection stands at PKR492.406bn

The Federal Board of Revenue has provisionally collected PKR492.406bn during first four months (July-October) of 2011-12 against PKR397.043bn in the corresponding period last fiscal year, reflecting an increase of 24%. According to the revenue collection data compiled here on Tuesday, the net sales tax collection amounted to PKR240.158bn during first four months of 2011-12 against PKR180.486bn in the same period last fiscal year, reflecting an increase of 33.1%.

USAID remained largest assistance provider in Oct

Pakistan received USD240.8mn as external assistance in the month of October, where USAID disbursed USD82.31mn.
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