Petrobras

Petrobras tries to recover market share

Monday, 29 May 2017

Petrobras’ decision to reduce the average gasoline price by 5.4% and the average diesel price by 3.5% on Thursday night was motivated by a market recovery strategy rather than a fuel prices adjustment to the international market. Seven months after the launch of the new pricing policy, the company has still not been able to contain the advances of imports by third parties and recover the lost market.

In a report, UBS indicated that the company began to have problems with its share of the domestic fuel market, with increased purchases of diesel and gasoline by the competition.

In a statement released last week, Petrobras pointed out that the importation of gasoline by third parties increased from 240 million liters in February to 419 million liters in April, with a forecast of maintaining this level in May. With respect to diesel, import rose from 564 million liters in February to 811 million liters in April, with a forecast of surpassing 1 billion liters in May.

“With this, Petrobras refineries may reach a utilization factor below the latest data released by the company in its quarterly results, which was 77%,” the company added.

Imports of diesel and gasoline by third parties have gained strength in recent years, when Petrobras decided to raise its margins to rebuild the cash. With the premium high, buying fuel abroad was cheaper than buying from Petrobras refineries. It was not long before companies started betting on imports. Since the launch of Petrobras’ pricing policy in mid-October, oil prices at the refineries have fallen, but data from the National Petroleum Agency (ANP) indicate that importing still remains advantageous.

According to ANP data, in the second two-month period of 2017, trading companies asked for authorization to import 3.312 billion liters of diesel, 47% more than the one registered between January and February and 49% above the orders applied in the second two months of 2016.

With the increase of imports by third parties, the factor of use of the Brazilian refineries can continue falling and reach 75%, according to UBS.

“Current refining margins are clearly not sustainable in the long term, and we should see a standard level of 5% to 10%,” analysts Luiz Carvalho and Julia Ozenda said in a report on the subject distributed to clients.

By UBS’s calculations, before Thursday’s announcement and considering an import cost of $ 7 a barrel, the spot price of European gasoline was at 2.9% (and a premium of 8,9% in the 30-day moving average), while diesel had a premium of 16.4% (and premium of 22.4% in the 30-day moving average).

With the readjustment, the bank accounts, the spot price of gasoline passed a lag of 2.3% and the diesel spot premium fell to 13.3%.

 

“After the recent devaluation of the real at around 6% due to political events in Brazil, the premium fell and looking at the spot alone, these falls would not make much sense,” the analysts conclude, noting that the company took into account the loss of the decision to lower prices at refineries.

Source: Valor

 

Petrobras’ decision to reduce the average gasoline price by 5.4% and the average diesel price by 3.5% on Thursday night was motivated by a market recovery strategy rather than a fuel prices adjustment to the international market. Seven months after the launch of the new pricing policy, the company has still not been able to contain the advances of imports by third parties and recover the lost market.

 

In a report, UBS indicated that the company began to have problems with its share of the domestic fuel market, with increased purchases of diesel and gasoline by the competition.

 

In a statement released last week, Petrobras pointed out that the importation of gasoline by third parties increased from 240 million liters in February to 419 million liters in April, with a forecast of maintaining this level in May. With respect to diesel, import rose from 564 million liters in February to 811 million liters in April, with a forecast of surpassing 1 billion liters in May.

“With this, Petrobras refineries may reach a utilization factor below the latest data released by the company in its quarterly results, which was 77%,” the company added.

 

Imports of diesel and gasoline by third parties have gained strength in recent years, when Petrobras decided to raise its margins to rebuild the cash. With the premium high, buying fuel abroad was cheaper than buying from Petrobras refineries. It was not long before companies started betting on imports. Since the launch of Petrobras’ pricing policy in mid-October, oil prices at the refineries have fallen, but data from the National Petroleum Agency (ANP) indicate that importing still remains advantageous.

According to ANP data, in the second two-month period of 2017, trading companies asked for authorization to import 3.312 billion liters of diesel, 47% more than the one registered between January and February and 49% above the orders applied in the second two months of 2016.

 

With the increase of imports by third parties, the factor of use of the Brazilian refineries can continue falling and reach 75%, according to UBS.

“Current refining margins are clearly not sustainable in the long term, and we should see a standard level of 5% to 10%,” analysts Luiz Carvalho and Julia Ozenda said in a report on the subject distributed to clients.

 

By UBS’s calculations, before Thursday’s announcement and considering an import cost of $ 7 a barrel, the spot price of European gasoline was at 2.9% (and a premium of 8,9% in the 30-day moving average), while diesel had a premium of 16.4% (and premium of 22.4% in the 30-day moving average).

With the readjustment, the bank accounts, the spot price of gasoline passed a lag of 2.3% and the diesel spot premium fell to 13.3%.

 

“After the recent devaluation of the real at around 6% due to political events in Brazil, the premium fell and looking at the spot alone, these falls would not make much sense,” the analysts conclude, noting that the company took into account the loss of the decision to lower prices at refineries.

Source: Valor

Categories: Petrobras

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