The impact of the new coronavirus on fuel sales in March and April

A ANP released this week data on fuel sales by distributors in the month of April. They show the strong impact of social isolation of sales in April, but timidly in March, the first month of social isolation due to the circulation of the new coronavirus, contrary to the reports of managers of large companies in the sector.

The expectation was for a drop in sales of diesel around 30% and gasoline and ethanol around 60% already in the second half of March, as mentioned in a previous post. However, the numbers indicate that there was no drop in diesel sales in March compared to the same month of 2019, but an increase of 3%. If we consider that there is no seasonality in sales between fortnights, on average, the increase in diesel sales in the 2nd half of March would be 6% compared to 2019 and a decrease of 7% and 5% compared to February and the historical average , respectively.

A grain harvest exceeded expectations and was mainly responsible for this increase in diesel consumption in the period, instead of the expected reduction in response to social isolation.

In the month of April, when the isolation was more intensive, at the federal level and throughout the month, it is possible to observe the impact, although lower than expected. There was a 15% drop in distributor sales compared to April 2019. When compared with the historical average of the last 5 years and with the month of March, the reduction is smaller, around 13%.

Figure 1: Sales of diesel oil by distributors (MM m³). Analysis: ANP Data, ILOS Analysis.

The volume of the Otto cycle sold in March, presented as gasoline equivalent, fell by 14% compared to the same period in 2019, 19% compared to February and 18% compared to the March average of the last 5 years. For the 2nd half of March, it is assumed that the drop would be 28% for the Otto cycle in relation to the previous year, half of the estimate declared in interviews.

The drop in the market for fuels used to supply cars in April was 30%, following the trend. While the April average for the last 5 years is around 4,5 MM m³, consumption was 3,1 MM m³!

Figure 2: Sales of gasoline equivalent by distributors (MM m³). Source: ANP data, ILOS analysis.

Figure 3: Evolution of sales by distributors in 2020. Source: ANP Data, ILOS Analysis
* 0,68 – The calculation of Gasoline Equivalent considers the energy efficiency of Ethanol in the composition of the Otto cycle. To calculate total gasoline consumption, add the volume of ethanol to the sales volume of C gasoline multiplied by the efficiency factor of 0,68: Gasoline Equivalent (m³) = Gasoline C (m³) + Hydrated Ethanol (m³)

It is expected that the coming months will have similar behavior to April or even more accentuated. The close start of the loosening of the quarantine tends to a slight recovery in consumption, mainly of gasoline and ethanol, but, on the other hand, there will also be a gradual reduction in the purchasing power of the population due to unemployment as a result of isolation. This reduction in purchasing power will impact not only the otto cycle, but also diesel, with a reduction in the production and transport of consumer goods, maintaining the challenging situation in which the sector finds itself.