Petroleum consumption in the country has cratered in the last year or so, and the reasons have been talked of many times in this space. The latest OMC sales on the whole look the same where volumes of the three main petroleum products together remained down by almost 7 percent year-on-year in 4MFY20, where the major drag came from the furnace oil and high speed diesel. The reason for the decline furnace oil volumes(16% YoY) is well known as furnace oil is aggressivley being replaced from the power sector; whereas high speed diesel suffers from excessive smuggling of the same as well as slow economic growth in the country. On the other hand, motor gasoline supported the overll sales by the oil marketing companies.
The year-on-year trend in October 2019 has been no different but the month-on-month comparison shows an interesting twist. Following the month-on-month recovery in HSD volumes in September 2019 where bulk was attributed to low base in the preceeding month (Aug-2019), HSD volumes sold by the oil marketing companies have seen an increase of around 19 percent month-on-month in October 2019, and an improvement in diesel volumes these days is encouraging as its consumption is positively linked to economic activity. Whether an economic turnaround is around the corner or its too early to predict a rebound in the insutrial growth – growth in HSD consumption for two consecutive months is noticeable and a good sign especially after it started plummeting in mid 2018 especially when there is still no respite on the smuggling aspect, nor its pricing.
With overall petroleum sales under pressure,the market shares of the OMCs have also seen contraction off late amid intense competition. However, in recent months especially the summer season, PSO regained some of its lost market share primarily due to its increase in sales of furnace oil. Among other listed players, HASCOL that has lost significant market share in the last one year and stood at 5 percent in 1QFY20 versus 13 percent in 1QFY19, has finally seen a recovery in its share, which could be due to a change in policy after dismal 9MCY19 financial performance.