Fertiliser sales up seven percent to 8.24 million tons in 2017

KARACHI: Fertiliser sales rose around seven percent to 8.24 million tons during the last calendar year as government’s subsidy encouraged its demand in the growing agriculture sector.

Brokerage Taurus Securities, citing the industry’s data on Wednesday, said sales of fertiliser (urea and diammonium phosphate) stood at 7.69 million tons in 2016.

Urea sales increased seven percent to 5.86 million tons in 2017, while DAP off-take rose eight percent to 2.38 million tons.

In December 2017, urea sales rose 19 percent month-on-month to 717,000 tons on its growing demand for the winter crops.

Its sales, however, fell 20 percent during the last month as compared to the same month a year ago.

Sales of diammonium phosphate (DAP) decreased three percent year-on-year to 150,000 tons in December 2017. DAP sales sharply declined 70 percent month-on-month.

“The (DAP) demand was low due to seasonal factors,” analyst Waqas Ahmed at Taurus Securities said.

Ahmed said the sales are expected to slow down in the coming months as the winter season is nearing an end.

The analyst, however, added that fertiliser demand is expected to improve during the current year as agriculture sector is growing and the subsidy is likely to continue.

Government’s subsidy programme brought urea price down to Rs1,400/bag during the last fiscal year of 2016/17 from Rs1,800/bag earlier. The subsidy scheme ended on June 30 last year. But, it was extended for the current fiscal year. So, the urea price is expected to be maintained at the last year’s level under the new subsidy programme.

The country is self-sufficient in fertiliser production with an annual capacity of six million tonnes little over the local demand. Yet, the government subsidises prices of fertiliser to help farmers sustain the impact of production cost. Unsettled subsidy claims of yesteryears dissuaded fertiliser makers from participating in the subsidy scheme and thereby reducing prices.

In November last year, Punjab had banned some fertiliser distribution companies for not passing on the financial assistance to the farmers.

Ahmed hoped that the start of the second liquefied natural gas terminal would improve gas supply to the fertiliser sector and help improve its production.

The analyst said the government’s approval last month to export of 35,000 tons of urea to Sri Lanka is expected to ease the inventory level. “By January-end, local urea inventory level is expected at 0.30 million tons,” he added.

The Economic Coordination Committee of the Cabinet, in its last month meeting, had extended deadline to the urea exports of 41,000 tons. The government allowed export of 0.6 million tons of surplus urea till October 2017. Of that, 0.559 million tons of urea were exported till the deadline.