Pakistani Demand on Track Despite Covid-19

Major cities in Pakistan have been under lockdown since the third week of March to curb the spread of coronavirus. As of April 2, the total reported cases in Pakistan have exceeded 2300 with 32 deaths so far. Since Pakistan was among the countries where Covid-19 spread started in the second phase, the impact of this virus on trade was not seen in the first quarter. However, the statistics of imports and consumption coming at the end of March 2020 are showing signs of a slowdown in imports which will lead to serious disruptions in overall trade and the economy.

Edible oils and fats are one of the major import commodities in Pakistan and palm oil is the major feedstock for both the edible oil and food industry. At the end of March 2020, the import of oils and fats in Pakistan is showing a slight decline of 1.2% as compared to the same period of last year.

Oils & Fats Import Analysis (January – March 2020 vs 2019)

Commodity Jan-Mar 2020 (MT) Jan-Mar 2019 (MT) Changes Volume (MT) Changes %
Crude Palm Oil 43,598 114,539 (70,941) (61.94)
Palm Oil 215,307 186,926 28,381 15.18
Palm Olein 526,335 457,367 68,968 15.08
Palm Fats 22,699 29,629 (6,930) (23.39)
Soybean oil 5,190 35,110 (29,920) (85.22)
Total 813,129 823,571 (10,442) (1.27)

Source: Shipping Agents Data

The arrival of oils and fats in March was recorded at approximately 278,000 MT which was lower than expected. The import of edible oil usually increases two months before the start of Ramadan in anticipation of the increased demand all over the country. However, the imports in the month of March are approximately 40,000 – 50,000 MT lower than the industry expectations. This shortfall in import was met with the local stocks maintained at Port Qasim and Karachi port.

Palm Oil (MT) Soybean Oil (MT) Sunflower Oil (MT) Total Ending Stocks (MT)
January 373,630 7,000 380,630
February 417,170 3,300 420,470
March 380,270 100 380,370

Source: MPOC Intelligence

According to the figure quoted by the industry, the local stocks at the ports are registering a decline of 9.5% or 40,100 MT at the end of March. The current stock level in Pakistan is still maintaining a higher than average level and will support the local demand and consumption if import activity reduces further.

As indicated earlier, the import of oils and fats is yet to register any serious impact because of the Covid-19 spread in Pakistan, however, this prolonged lockdown is bound to impact some major consuming sectors including the catering industry, fried food vendors and sweet makers. The industry might not be able to capitalize on the increased Ramadan demand, but the average monthly requirement of oils and fats will continue to be met with imports.

The bookings and arrival of palm oil in the month of April is likely to maintain the level of 250,000 MT – 275,000 MT. Local industry members are actually pushing for early deliveries of their future trades due to the concerns of shortage in Malaysia’s production after the news of some of the plantations being shut down in Sabah.

Keeping in view that a lot of major Malaysian markets are showing declining trends in imports, it is encouraging to note that Pakistan will continue to buy its average monthly requirement. Malaysian palm oil exports to Pakistan have also increased significantly at the end of March. The total exports of Malaysian palm oil to Pakistan registered an increase of 55% (source: data on arrival basis) as compared to the same period last year.

Prepared by:  Faisal Iqbal

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