Urea price increases Rs50 to Rs1,630-1,640/bag

KARACHI: Urea price rose Rs50 to Rs1,630-1,640/bag as demand of the agricultural key nutrient outstripped its supply to summer crops, a brokerage reported on Tuesday.

Dealer transfer prices of manufacturers are hovering around Rs1,570 to 1,580/bag as compared to Rs1,520/bag.

“We attribute the rise in urea prices to prevailing low urea inventory levels and seasonal demand pickup due to rice/cotton crops,” Topline Research said in a report.

Analysts were expecting price hike of Rs60 a bag by manufacturers in July. Urea sales recorded a 22 percent increase to 601,000 tons in June, while the off-take decreased 43 percent this year due to the high base effect of last year. Closing inventory for urea with local producers as of June 30 stood at 112,000 tons. Moreover, closing inventory of diammonium phosphate (DAP) arrived at 538,000 tons in the same period.

“As inventory levels subside and demand appears rosy, we expect shortage of urea in the country to provide a trigger to prices,” analyst Tahir Abbas at Arif Habib Limited said. “As demand picks up we remain upbeat about urea prices in CY18.”

Cumulative urea off-take of Fauji Fertilizer Company and Fauji Fertilizer Bin Qasim Limited recorded a 43 percent decline to 271,000 tons in June compared to last year. Likewise, Engro Fertilizer urea off-take dropped 23 percent from last year.

Urea sales posted a meagre growth of one percent during the first half of 2018 compared to the first half of the previous year. DAP sales exhibited a 13 percent growth to stand at 668,000 tons during the period compared to the last year.