December urea sales likely to rise 20pc YoY

KARACHI: Underpinned by late farmer buying, strong cotton crop and lower fertiliser prices, the country’s total urea sales are likely to hover around 0.9 to one million tons in December 2016, up by approximately 20 percent year-on-year, a brokerage house said on Tuesday.

Analysts attribute this recovery to delayed purchasing of the commodity on the part of the growers during the first half of 2016. In addition, an improved cotton crop, enhanced affordability of farmers and cheaper urea, which went down by 30 percent as compared to the last year, also helped increase the fertiliser offtake, Topline Securities report said.

The estimated urea inventory was around 0.9 to 1.1 million tons at the end of December 2016 as compared to around 1.2 million tons in November. The brokerage house’s year-on-year analysis projected that in CY16, total urea sales, which represent around 75 percent of the total fertiliser sales in Pakistan, are likely to reach 5.4 to 5.6 million tons, up by around one percent Year-on-Year.

The report also reveals Fatima Fertilizer (FATIMA) is expected to post significant sales numbers of around 350k tons for December 2016, supported by substantial discounts and low base effect of November 2016 numbers.

Similarly, Engro Fertilizer (EFERT) is also seen posting strong sales of 360k tons, a growth of 65 percent month-on-month, whereas Fauji Fertilizer (FFC and FFBL) is likely to decline by 25 percent on a monthly basis by posting sales of 316k tons.

The urea offtake is expected to remain strong in January 2017 due to the ongoing Rabi season, it said adding that the surge in global urea prices (up 22 percent since July 2016) and improving demand-supply scenario (some reduction in inventory) can lead to improving dynamics; thus, recovery in the local fertiliser sector. Further, any development on the urea export front will also bode well for the sector, the report added.