Urea sales estimated at 464,000tns in Oct

KARACHI: Urea sales are expected to increase 24 percent year-on-year to 464,000 tons in October as demand for the key nutrient increased in the winter crop, a brokerage reported on Monday.

“Higher urea sales are attributed to uptick amidst seasonal rabi crop,” analyst Shankar Talreja at Topline Securities said. In October, Fatima Fertilizer and Agritech resumed their operations after the government agreed to start supply gas to the closed plants.

“Helped by both plants, urea production for October is likely to reach around 540,000 tons versus a monthly average of 445,000 tons since January,” Talreja said. Three plants, including Pakarab Fertilizers were shut down last year due to paucity of gas, which is the main feedstock.

The brokerage further expected the closing inventory of urea in October at 200,000 tons. The country is also expected to receive 50,000 tons of imported urea in the mid the current month.

In September, the Economic Coordination Committee of the cabinet allowed 100,000 tons of urea imports to meet shortage of the nutrient for the winter crops. Though the country is self-sufficient in urea production with annual output of 6.5 million tons more than 5.8 million tons of local demand, the gas curtailment recently brought down the inventory to the lowest level.

Urea sales grew a meager one percent in the first 10 months of the current calendar year due to increase in prices of rice and cotton. Engro Fertilizer is likely to see a 12 percent year-on-year growth in October, taking its January-October sales to 1.64 million tons, up 15 percent.

Fauji Fertilizer is expected to record 203,000 tons of sales in October and its overall sales are likely to surpass two million tons, depicting a 12 percent increase. “Key risks to fertiliser industry include decline in international urea prices, slower than expected urea sales, poor crop season, sharp hike in domestic gas price, and rupee devaluation,” Talreja added.