Urea sales up 33 percent to 539,000 tons in January

KARACHI: Sales of urea grew 33 percent year on year to 539,000 tons in January on growth in fertiliser demand, a brokerage reported.

Analyst Waqas Ahmed at Taurus Securities attributed the growth in sales to “pent-up demand as sugar sugarcane crop harvesting was delayed”.

Usually, sugar mills start crushing in October, but they couldn’t start the operation on time for the current crop season of 2017/18 due to issue on support price and surplus stock of sweetener.

The surplus stock piled up to three million tons in the run-up to sugarcane crushing.

In January, diammonium phosphate (DAP) offtake remained robust as it rose 51 percent year on year to 92,000 tons. DAP average monthly sales for January stood at 57,000 tons for the past 10 years.

Urea sales, however, fell 25 percent and DAP offtake decreased 39 percent month on month (MoM) in January.

“Going forward, demand for fertilisers would likely remain a function of government policies and are expected to slightly improve on the back of a better agronomic situation,” Ahmed said.

“Commencement of the second LNG (liquefied natural gas) terminal would improve gas supply to the sector, keeping production at optimal levels.”

In December last year, Economic Coordination Committee allowed urea export to Sri Lanka to ease the surplus level.

“Recent approval by ECC to export 35,000 tons of urea to Sri Lanka has further eased inventory levels as it declined 25 percent MoM to 254,000 tons, and would improve urea realised prices,” Ahmed of Taurus Securities said.