Urea sales may hit0.375 million tonnes

KARACHI: Driven by a strong Rabi season demand, domestic urea sales in October 2017 are figured to hit 375,000 tonnes, up by 4 percent compared to the off-take recorded during the same period last year, whereas on a month-on-month basis around 110 percent more fertiliser was sold across the country, analysts at Topline Securities said in a report on Friday.  

“Exports in the period under review are expected to reach around 169,000 tons as Fauji Fertiliser Company Limited (FFC) managed to export around 131,000 tonnes, Engro Fertilizers Limited (EFERT) 7,000 tonnes, and Fatima Fertiliser dispatched 30,000 tonnes of urea abroad,” the research report said. 

The report said industry exports up to October 31, 2017 were around 570,000 tonnes, out of which FFC was able to sell around 222,000 tonnes overseas, while EFERT shipped out around 220,000 tonnes of the commodity.

Analysts expect the urea production to drop further down to 380,000 tonnes due to the disruption of operations at EFERT and FFC plants. “Assuming opening inventory of 840,000 tonnes, October ending inventory could be less than 700,000 tonnes,” the report said.

They report added that international urea prices stabilized in October. “Middle Eastern and Chinese prices ranged around $270-280/tonne, while US’s were between $240-255/tonne,” the report said. 

Analysts were of the view the recent rise in prices was driven by a host of factors like: lower Chinese exports, higher coal price, US dollar weakness, and resurgence of global demand (India imported 1.4 million tonnes in 3Q).  “Going forward, prices are likely to remain volatile as new capacities may come online and seasonal demand adjusts due to climate changes,” the Topline report concluded.