The Oil Companies Advisory Committee (OCAC) has released the official petroleum consumption statistics for the month of April-10. FYTD consumption is up 10%YoY to 17.02mn MT underpinned by a surge in both regulated and deregulated product lines. Higher oil based thermal load factor continues to add impetus to fuel oil demand while lighter regulated distillates, with the exception of kerosene oil, posted upticks based on lower pricing distortions and narrowing alternative pricing differentials. Black oil consumption surged by 11%YoY to 7.48mn MT while white oil volumes increased by 8%YoY to 9.18mn MT during the review period. On a MoM basis, POL volumes increased by 6% underpinned by an 18% surge in fuel oil volumes and seasonal uptick in HSD volumes inline with the seasonal agri-cycle. We expect POL volumes to continue on an uptrend with power sector capacity additions and narrowing alternative pricing differentials. That said, we place our investment case for PSO under review to update estimates in view of 9MFY10 results as well as gradual market share slippage on product availability against higher circular debt exposure.
