PSX Refinery Sector Faces Selling Pressure Following Petrol Import Cost Policy Shift

Refinery Heavyweights Diverge From Broader PSX Recovery

While fertilizer and cement stocks propelled the KSE-100 higher, Pakistan's domestic refinery sector encountered sharp selling pressure in early November trading. Shares of leading refiners, including Attock Refinery Limited (ATRL) and National Refinery Limited (NRL), hit lower circuit limits following a government pricing adjustment.

Understanding the Policy Shift

• Freight & Import Cost Absorption: Under the revised fuel pricing mechanism, policymakers opted to pass incremental petrol import and freight cost adjustments onto domestic refining companies rather than raising retail pump prices for consumers.
• Gross Refining Margin (GRM) Impact: Equity analysts estimate the policy adjustment could temporarily compress domestic refiners' net margins during Q2 FY27 while upgrade negotiations continue.
• Sector Rotation: Institutional desks rotated capital out of downstream refining into upstream exploration & production (E&P) names and fertilizer producers with stronger pricing power.