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ICICI Securities Report
As per petroleum ministry's data for June 2020 and the recent press reports,
- excess of production over consumption is down from 6 million metric tonne (mmt) in April 2020 to 2.6 mmt in May 2020 and further to 2.4mmt in June 2020;
- product net exports are down sharply from 2.7mmt in April 2020 to 0.8mmt in June 2020 (2.3mmt in May 2020);
- diesel net exports are down from 3.4mmt in April 2020 to 2mmt in June 2020 (2.7mmt in May 2020);
- consumption recovery has reversed in case of auto fuels in general and diesel in particular in July 2020;
- refiners have cut utilisation rate in July 2020 from levels in June 2020 and maintenance shutdowns were also resorted to in July 2020 and are planned in August 2020 probably due to reversal of demand recovery, weak export markets and gross refining margin (GRM).
It, therefore, appears Hindustan Petroleum Corporation Ltd. is likely to outperform peers on utilisation rate even in Q2 FY21 like it did in Q1.
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