GRMs: Weak start to 3QFY12

GRMs: Weak start to 3QFY12

Dec-11’s GRM plunged 12% MoM: Gross refining margins for the local refineries declined 12% MoM during Dec-11 to clock in at USD3.89/bbl. We have restated our preceding month GRMs by 0.52/bbl to USD4.44/bbl owing to higher than expected Arab light prices (released by Opec).

Spread plummeted across all major products: Except for naphtha and MS, decline in prices of all other products outpaced correction in oil prices during the month. FO discount to crude oil widened by USD1 to USD-10.41/bbl, while the HSD spread witnessed a marginal decline of USD1.9/bbl to USD13.21/bbl. High demand from Korea amid slightly tight supply helped naphtha prices, with spreads improving by USD4.6/bbl to USD-10.75/bbl.the-bell-2

GRMs decline for all listed refineries:Dec-11 GRM for ATRL was down by 10% MoM to USD3.05/bbl, followed by 33% MoM decrease in PRL’s GRM, which averaged USD1.08/bbl. With 8% MoM decline, NRL’s GRM remained the highest amongst the refiners where its Dec-11 GRM averaged USD5.34/bbl.

Dec-11’s GRM plunged 12%

Gross refining margin for the Pakistan’s refining sector was down by 12% MoM to USD3.89/bbl during Dec-11. Since refined product prices are determined based on preceding month’s average prices that prevailed in the Arab Gulf region, Dec-11 GRM shall determine Jan-12 profitably for refiners. We also have restated Nov-11 GRM by 0.52/bbl to USD4.44/bbl, based on the actual Arab light prices, released by Opec.

Spread plummeted across all major products

After a roller coaster ride during Dec-11, crude oil prices averaged USD108.18/bbl, which is lower by 2% MoM, compared with 3%,4%,3% and 1% MoM decline in HSD, KERO, Gas oil and MS prices respectively. Naphtha remained the only product which witnessed MoM (2%) improvement in prices during Dec-11, owing to higher demand from Korea amid tight supply. Naphtha spread improved by USD4.6/bbl, but still remained negative at USD-10.75/bbl. Expensive import by PSO during Dec-11 helped MS spread to improve by USD1.02/bbl to USD-3.68/bbl. Weak sentiment amid bearish demand led to USD1/bbl widening in FO discount to crude oil, which averaged USD-10.41/bbl. The prospect of a recession coupled with a mild winter has weakened the seasonal uptick in demand for gasoil, and its spread averaged at USD13.21/bbl, down USD1.98/bbl.

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GRM decline for all listed refineries

ATRL remained the key beneficiary of improvement in Naphtha and MS spread with GRMs trimming by 10% (USD0.36/bbl) from the previous month. High exposure to HSD trimmed NRL’s GRM by 8% or USD0.48/bbl whereas PRL witnessed 33% MoM reduction in GRM to USD1.08/bbl.

Economic & Political News

Consumer Price Index settles at 9.7% in December

The monthly Consumer Price Index (CPI) settled at 9.7% one month-on-month basis in December 2011, a lower-than-expected level, after decline of 0.49% from the previous month.

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