Petroleum Industry Sees Growth in Sales Volume

According to recent data from the Oil Companies Advisory Committee (OCAC), the petroleum industry witnessed a notable uptick in sales volume in March 2024, marking the first year-on-year increase in the last 20 months. Overall industry sales volumes rose by 4% compared to the same period last year, reaching 1.2 million tonnes.

Factors Driving Growth

The growth in sales volume was primarily driven by increases in High-Speed Diesel (HSD) and Motor Spirit (MS) sales, which grew by 17% and 3%, respectively. The boost in HSD sales was attributed to the wheat harvesting season, while MS sales saw a more subdued growth.

On the other hand, Furnace Oil (FO) sales continued to decline, as power generation shifted towards alternative sources.

Industry Performance in 9MFY24

Despite the positive momentum in March 2024, the industry faced challenges in the preceding months. In the nine months ending March 2024 (9MFY24), overall sales volume declined by 11% year-on-year. This decline was attributed to various factors including rising petroleum product costs, a slowdown in car sales, decreased economic activity, and the use of inexpensive fuel for electricity generation.

Performance of Major Companies

Most major publicly traded companies experienced positive growth in sales volume, except for APL and HASCOL. PSO recorded the highest sales volume share at 52%, despite negative growth in FO sales. Notably, PSO witnessed double-digit growth in both MS and HSD sales in March 2024.

Projections and Outlook

Looking ahead, analysts project that MS sales may face pressure due to higher pricing and lower automotive sales. FO sales are also expected to remain depressed due to decreased demand, albeit with a smaller percentage decline due to a smaller base effect. Conversely, HSD sales are projected to expand, driven by the ongoing wheat harvesting season. However, concerns remain about the potential impact of HSD smuggling on Oil Marketing Company (OMC) volumes.

Industry-Wide Sales Volume Data (Mar-24)

Industry Segment	Mar-24 Volume (‘000 tonnes)	MoM % Change	YoY % Change
Motor Spirit (MS)	572.7	5%	3%
High-Speed Diesel (HSD)	462.7	4%	17%
Furnace Oil (FO)	44.3	-11%	-48%
Total	1,154.3	3%	4%

Conclusion

Despite challenges in recent months, the petroleum industry saw a positive uptick in sales volume in March 2024, driven by increased HSD and MS sales. While certain segments continue to face challenges, overall industry performance shows signs of resilience amidst changing market dynamics. Analysts will continue to monitor key indicators to gauge the industry’s trajectory in the coming months.

The information in this article is based on research by Darson Securities. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions