ISLAMABAD: Urea off take during calendar year 2019 has touched 6 million tons, which is the highest figure in last three years, while December 2019 alone will cross 1.2 million tons, which is again a historic high of last 72 years.
In December 2019, the off take is likely to stand at 1.22 million tons as compared to 0.38 million tons in November 2019.
Fertilizer sales have increased due to sowing on wheat across major agriculture areas of Pakistan along with anticipation of increase in urea prices because of government’s plan of increasing gas prices.
It is worth mentioning that Fauji Fertilizer Company (FFC) being the largest manufacturer of this agriculture input in Pakistan is likely to be the major contributor in Urea sales. It has sold above 0.5 million tons of urea in December 2019, followed by Engro fertilizer with 0.450 million tons. Fauji Fertilizer Bin Qasim (FFBL) and Fatima Fertilizer Limited have followed the same trend with significant increase in off takes.
Urea sales have increased significantly due to seasonal demand of wheat sowing and inventory buildup move by dealers in anticipation of further increase in Urea prices due to proposed gas price hike.
It is worth mentioning that Sui Northern Gas Pipelines Limited (SNGP) and Sui Southern Gas Pipelines Limited (SSGC) have proposed 135 and 31 percent increase in gas price for Feed and Fuel gas used in fertilizer manufacturing. Fertilizer companies will increase prices by amount required to pass on the impact of increase in gas tariff. Executive Director of the Fertilizer Manufacturers of Pakistan Advisory Council Sher Shah told The News that this year urea off take is ending at approximately 6 million tons, which is highest in last three years. In previous years it was around 5.8 million tons. He said that earlier, the fertilizer sector was much worried regarding build up inventories, but now the situation has improved sizably with the increase in sales. Incorporating sales for December 2019 Pakistan total urea off takes for 2019 will reach 6.1 million tons. Fauji Fertilizer is expected to record sales of 2.4 million tons and Engro Fertilizer Company Limited has witnessed sales of 1.97 million tons of Urea due to better availability of gas from MARI field. Engro Fertilizer remains primary beneficiary of lower gas off take by Guddu Power Plant due to induction of cheaper generation in grid in a time of lower electricity demand.