Fertilizers: Slight demand pick-up ahead of the Budget - By JS Research

Jun 4 2025

JS Global Capital

• As per provisional figures, Urea off-take during May 2025 is expected to clock in at 420k tons, up 6% YoY/67% MoM. This marks the first YoY growth in Urea sales volumes after a sustained period of weak performance since CYTD. While DAP volumes likely to arrive at 94k tons (+2.3x YoY). CYTD urea/ DAP sales are likely to post 31%/20% YoY decline.

• Company-wise, Fauji Fertilizer Company (FFC) is expected to post Urea off-take of 206k tons in May-2025, down 28% YoY. In contrast, Engro Fertilizers (EFERT) is expected to post 86% YoY growth reflecting a low base-effect, while the company is also expected to surpass the CYTD monthly run-rate.

• Urea inventory is expected to reach an 8-year high of 1.3mn tons in May-2025, similar to the levels seen during the same month in 2017/ 2020, which were later offloaded due to exports / strong sales in latter months. Although the chances for govt allowing exports are low at this point, however, any such allowance would favor EFERT more than the peers.

Refinery: GRMs Sharply Recovering - By Sherman Research

Jun 4 2025

Sherman Securities

• After plunging to lowest level of US$4.5 per barrel in April 25, Gross Refining Margins (GRMs) of local refineries significantly recovered to US$9.3 per barrel during ongoing month of June. This is positive for local refineries as their earnings are directly linked with changes in GRMs.

• Just to recall, highest GRM was recorded at US$30 per barrel during July 2022 while average GRMs during last 5 years stood at US$7 per barrel.

• GRM is the sum of the weighted average spread of products which a refinery is yielding on every barrel of crude it processes. Major products include Diesel (HSD), Gasoline (MS) and Furnace oil (FO).

Cement: May’25 dispatches up 39%MoM - By Taurus Research

Jun 4 2025

Taurus Securities

• Total Cement dispatches in May’25 up 39%MoM on the back of reviving construction demand i.e. Domestic sales went up 46% MoM to 3.6Mn tons. Whereas, total export sales up 20%MoM on account of better retention prices and surge in demand post Indo-Pak de-escalation which benefited North Players, mainly. On a YoY basis, total domestic sales were up 9% in May’25 as lower interest rates and record low inflation have supported players to improve their margins and increased volumes. Although, higher duties and taxes on the cement sector have reduced the overall demand, resulting in overcapacity.

• North-based domestic sales increased 42%MoM in May’25 due to surge in the construction activities amid seasonal demand and better volumes i.e. lower retail prices compared to the South region. Wherein, export sales were up significantly by 1.1xMoM on the revival of regional sales post Indo-Pak deescalation. South-based domestic sales surged by 64%MoM in May’25 amid revival of the construction demand. On the export front, South-based exports were up 5%MoM, respectively.

• On a YoY basis, North-based domestic sales surged 10%YoY in May’25 due to pick up in construction demand on the back of lower interest rates and record low inflation. Similarly, Northbased exports were up significantly by 48%YoY, reflecting higher demand from the export regions. On the South front, domestic sales during May’25 increased by 5%YoY. However, export sales dropped 2%YoY to 0.75Mn tons, respectively.

Technical Outlook: KSE-100 setting new high - By JS Research

Jun 4 2025

JS Global Capital

• The KSE-100 index showed positive movement to close at 120,451, up 1,573 points DoD. Volumes stood high at 578mn shares compared to 498mn shares traded in the previous session. The index is likely to test its intraday all-time high of 120,797 where a break above targeting 123,375 which may later rise to 125,947. However, any downside will find support between 119,130 and 119,490 levels, respectively. The RSI and the MACD have moved up, supporting a positive view. We advise investors to view any downside as an opportunity to ‘Buy’, with risk defined below 119,130. The support and resistance are at 119,489 and 121,053, respectively.

Morning News: ADB approves $800m financing for Pakistan - By WE Research

Jun 4 2025

• The Asian Development Bank (ADB) has approved an $800 million program to enhance fiscal sustainability and public financial management in Pakistan through the Improved Resource Mobilization and Utilization Reform Program, Subprogram 2. This includes a $300 million policy-based loan and ADB’s first-ever policy-based guarantee of up to $500 million, expected to attract $1 billion from commercial banks. Originally scheduled for May 28, the ADB board meeting was delayed due to a request from the Indian executive director and later held on June 3. The program supports reforms in tax policy, public expenditure, digitalisation, and private sector development, aiming to reduce Pakistan’s fiscal deficit and debt while fostering sustainable growth. ADB and Pakistani officials emphasize the country's recent macroeconomic improvements and the importance of coordinated efforts for long-term fiscal resilience.

• President Asif Ali Zardari has summoned the National Assembly and Senate to convene on June 10 at 5 p.m. for the federal budget session for the fiscal year 2025–26. Finance Minister Senator Muhammad Aurangzeb is expected to present the budget and Finance Bill during these sessions, called under Article 54(1) of the Constitution. The National Assembly Secretariat has issued special passes for press, officials, and other attendees, while a comprehensive security plan has been put in place for the Parliament House to ensure safety during the proceedings.

• Pakistan’s budget team, led by Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb, is working to convince the IMF to drop its demand to raise the Federal Excise Duty (FED) on fertilizer from 5% to 10% in the 2025–26 budget. The government also aims to avoid a proposed 5% FED on pesticides, with both moves intended to ease pressure on the struggling agriculture sector. In exchange, Pakistan has highlighted provincial amendments to the Agriculture Income Tax (AIT), which will begin collection in the next fiscal year. The Federal Board of Revenue (FBR) has been asked to assess the impact of proposed tariff rationalization on imports, amid concerns about potential tax evasion. Meanwhile, the IMF has rejected requests to continue GST exemptions for the former FATA/PATA regions, with a reduced 12% GST now likely to be imposed. The negotiations reflect a balancing act between IMF conditions and domestic political and economic challenges, particularly in the agricultural sector.

Morning News: ADB approves $800m financial package for Pakistan - By Vector Research

Jun 4 2025

Vector Securities

• The Asian Development Bank (ADB) has approved an $800 million financial package for Pakistan under the Resource Mobilization Reform Program (Subprogram-II). According to the Ministry of Finance, the package includes a $300m policy-based loan (PBL) and a $500m program-based guarantee (PBG).

• The International Monetary Fund (IMF) has objected to the government's contentious proposals to impose a capital value tax on moveable assets and to slap a 5% federal excise duty on one-day-old chicks — measures that underscore the business-as-usual approach of the tax machinery. While the IMF did not endorse the tax on moveable assets and one-day-old chicks, it did agree to the imposition of a tax on digital services aimed at raising Rs10 billion in revenue, according to sources in the Federal Board of Revenue (FBR). There is also a budget proposal to increase the tax on dividend income of mutual funds from 15% to 20%.

• The Ministry of Commerce has expressed its inability to achieve the ambitious export target of $60 billion by 2029 set by the Prime Minister, citing a range of international and domestic challenges, according to official documents. 

Oil Marketing Companies: Expansion continues steadily - By Foundation Research

Jun 3 2025

Foundation Securities

• POL sales surged 10% YoY (↑5% MoM) to 1.5mn tons during the month of May’25 driven by pickup in economic activity amid reduced pilferage of Iranian fuel. Productwise breakdown reveals that MS/HSD sales enhanced 15/5% YoY during May’25 whereas FO sales grew 16% YoY. Company-wise analysis depicts that WAFI/HASCOL volumes expanded 23/31% YoY whereas PSO/APL volumes shrank 3/2% YoY during the month. Total sales during 11MFY25 settled at 14.8mn tons, up 7% YoY.

• White oil: Domestic petroleum sales (ex-non Energy) improved 10% YoY in May’25 in line with white oil sales that increased by the same magnitude. Sequentially, volumes went up 7%. Product-wise analysis reveals that MS/HSD sales clocked-in at 700/672K tons, up 15/5% YoY (↑6/8% MoM) while prices of MS/HSD declined marginally to PKR 254/257/ltr (down PKR 2/3/ltr). This takes 11MFY25 sales of MS/HSD to 6.9/6.3mn tons, reflecting growth of 7/10% YoY respectively.

• In the black oil segment, FO sales rose 16% YoY to 80K tons in May’25. During 11MFY25, FO sales fell 28% YoY amid lower demand from power producers given higher proportion of hydel, nuclear, RLNG, gas and coal power generation.

Oil Marketing Companies: OMC sales see sequential rise in third consecutive month - By AKD Research

Jun 3 2025

AKD Securities

• OMC Volumetric sales for the month of May’25 increased by 10%YoY/5%MoM to clock in at 1.5mn tons

• The uptick was primarily led by increases in retail fuel volumes i.e. MS, HSD and HOBC, which grew by 15%/5%/5%YoY, respectively.

• Volumetric sales for PSO during May’25 stood at 642k tons, down 3%YoY, however, up 3% on a sequential basis

Economy: Pre Budget FY26 - Balancing ice and fire - By JS Reserach

Jun 3 2025

JS Global Capital

• Federal Budget for FY26, scheduled for June 10th, 2025, will likely emphasize widening the tax net and ensuring continued compliance with fiscal responsibility.

• Budget is expected to take major steps toward fulfilling IMF conditions, focusing on revenue generation, spending efficiency, and structural reforms.

• Key areas include tax rationalization, broadening the tax base, and addressing energy sector inefficiencies. Government would want to continue focus on keeping inflation in check along with targeted growth-supportive measures.

Pakistan Economy: May’25 NCPI clocked-in at 3.5%YoY/-0.2%MoM - By Taurus Research

Jun 3 2025

Taurus Securities

• Headline inflation for the month of May’25 picked-up as anticipated due to the low base effect mainly, to clock-in at 3.5%YoY/- 0.2%MoM. Consequently, FYTD NCPI stands at 4.7%YoY. Accordingly, inflation in both Urban and Rural areas arrived in at 3.5%YoY and 3.4%YoY, respectively.

• Nevertheless, MoM inflation dipped on account of slight decrease in food prices; ~1.2%MoM decline in utility prices due to adjustment in electricity charges; muted impact of fuel prices; and continued slowdown in core inflation. To note, core inflation in Urban areas stood at 7.3%YoY, down 0.4%MoM and in Rural areas it was recorded at 8.8%YoY, down 0.4%MoM, respectively.

• In food category, excluding Eggs (up ~24.3%MoM), a broadbased drop was witnessed including substantial fall in prices of Onions & Tomatoes. Conversely, core segments like Clothing & Footwear , Furniture & Household Equipment, Restaurant & Hotels and the Miscellaneous showcased resilience. Additionally, SPI inflation on a YoY basis fell 0.6% in May’25. However, WPI inflation on a YoY basis was up 0.4% in May’25.