Karachi, September 02, 2021 (PPI-OT): Pakistan Energy: Storm in oil, petrochemical and coal markets

The Hurricane Ida, which hit the US gulf coasts on 28th Aug’21 has led to soaring energy and petrochemical prices where oil, coal and PVC prices witnessed an upswing of 5.2/9.0/8.9%WoW. While, oil price rally has witnessed a cool-off, coal has made new highs, touching US$150/MT.

Even though local cement prices have increased PkR60-70/bag in last 2 months, further price increase cannot be ruled out with utilization standing at 80-90%, however pressure from authorities can result in manufacturers abstaining from passing on the entire increase in cost of production.

Amongst chemicals sector, 8.3mn MT or 40% of US PVC production witnessed a shutdown last week, driving PVC ethylene margins to US$870/MT (QTD PVC ethylene margins at US$830/MT). If the margins sustain at US$830/MT levels, EPCL could witness another strong quarter in terms of profitability.

From economy’s vantage, we have projected US$9.1bn CAD for FY22 at a oil price assumption of US$65/bbl, where US$5/bbl change in assumption translates in upside risk of US$1.1bn to our CAD forecast (FYTD oil price average: US$74/bbl).