Urea sales jump 60pc in Nov on strong demand for Rabi crops

KARACHI: Urea manufacturers posted their best-monthly sales in November, growing volume by 60 percent to 602,000 tons on robust demand from the local farmers, though the government allowed further extension in export deadline, industry officials said on Saturday.

They added that the sales of diammonium phosphate (DAP) hit a historic high during November 2017 getting a strong thrust by the government’s subsidy scheme, while urea off-take also remained in top gear fueled by a high demand for the major winter crops.

“On a month-on-month basis, urea’s sale picked up 60 percent to reach 602,000 tons, while DAP’s surged 30 percent to hit 502,000 tons,” brokerage Taurus Securities said in its report covering the sector.

It quoted the sale data released by National Fertilizer Development Centre (NDFC).

“On a year-on-year basis urea and DAP cumulative (11 month of 2017) off-take reached 5.14 million and 2.22 million tons, showing an increase of 12 percent and 9 percent respectively.”

“We expect Rabi sowing season to maintain demand for fertilisers on the back of improved agronomic situation coupled with subsidies announced,” the report said.

The economic coordination committee of the cabinet on Friday extended export deadline for 41,000 tons of surplus urea till February 28, 2018, in line with a demand from the fertiliser manufacturers. It also allowed an additional quantity of 35,000 tons of urea to be exported to Sri Lanka.

The ECC, in January allowed export of 300,000 tons of urea fertiliser by April 2017. Export was allowed after availability of 1.6 million tons surplus inventory in the country by the end of 2016.

In May 2017, export quantity was increased to 600,000 million tons, and the deadline was extended to October 2017. Later the deadline was further extended to December 31, 2017.

The industry exported urea at prices ranging between $200-220/ton.

The brokerage report said Engro Corporation and Fatima Fertiliser (urea sales witnessed an astounding growth of 24 percent and 18 percent respectively year-on-year, however Fauji Fertilisers sales dipped a meager 2 percent during the period.

“Further, Fauji Fertiliser sales soared 2.4 percent to 483,000… similarly Fauji Fertilizer Bin Qasim Group and Engro Corporation sales also jumped 4 percent year-on-year,” it said.

It, however, added that urea and DAP off-take in November 2017 declined 21 percent owing to subsidy offered last year. International urea prices had dropped to $250/ton in December 2017 compared to $285 per ton a month earlier.

“We expect international urea prices to improve amid lower inventories, China’s production cuts from coal fuel plants, and the tightening of gas supplies,” the report said.

The ongoing Rabi sowing season is expected to drive demand for fertilisers, which would also be supported by Rs150/bag subsidy on DAP announced by the government of Punjab, whereas by the end of December 2017, local urea inventory level is expected to be at around 400,00 tons.

“With the commencement of second liquefied natural gas terminal, we expect optimal fertiliser production in the country,” the report said.