Persistent increment in furnace oil consumption and galloping motor gasoline off-take explains what has been going on in the petroleum product market. The two have been acting as the drivers of consumption in every subsequent quarter of FY14 so far. And, if the 9M FY14 sales and import figure are anything to judge by, the usage of the two mentioned petroleum products will continue to be the key in the petroleum consumption growth in FY14.
During the nine months of FY14, furnace oil and motor gasoline (petrol) registered a growth of 11 percent and 17 percent year on year, respectively. This trend is in tandem with imports of the two products, which increased by 10 percent and 20 percent year on year, respectively.
On the other hand, high speed diesel consumption, which is primarily in agriculture and transport sector, has been going down month over month; while sales during 9M FY14 stood stagnant compared to 9M FY13, the imports dropped further by 15 percent year on year. The recent increase of Iranian diesel has been a prime reason for depressing local diesel sales further.
Though the consumption of all products has slowed down a bit in 3Q FY14, somehow the industry dynamic have made it easier to predict what will happened come the close of FY14. Diesel will continue to face pressure from the cheaper smuggled Iranian diesel. On the flip side, motor gasoline and furnace oil will continue their growth trajectory as Compressed Natural Gas (CNG) will continue to be curtailed, and power sector will increase its purchase of furnace oil in the wake of increasing electricity shortfall in summers.
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