Fertiliser sales fall 32pc to 849,000 tons in Nov

KARACHI: Fertiliser sales sharply fell 32 percent year-on-year to 849,000 tons in November as there was a delay in wheat farming and an increase in prices, a brokerage reported on Wednesday.

Urea sales decreased 17 percent to 497,000 tons in November compared to the corresponding month a year earlier, while diammonium phosphate (DAP) off-take declined 47 percent year-on-year to 265,000 tons during the last month.

Analyst Mustafa Zamin at Taurus Securities said DAP sales fell as price increased on rupee depreciation and pass-on effect due to withdrawal of subsidy on DAP.

“On an industry front the picture is quiet dreary given the fact that pricing power

has put manufacturers in a sweet spot, albeit restraining farmers to purchase fertiliser on the flipside, decelerating growth in sales during the 11MCY18 as a result,” Zamin added.

“Consequently, we expect demand for local fertiliser to remain flat at 5.8 million tons for CY18, with margins dependent on the trajectory of fertiliser and gas prices. Fertiliser manufacturers’ margins could improve with increase in fertiliser prices, but erode if gas prices rise at the same time.”

In January-November, urea sales fell one percent to 5.1 million tons, while DAP off-take decreased eight percent to 2.04 million tons. Inventory level for urea continues to remain slightly north of the strategic reserve level of 200,000 tons, settling at 245,000 tons as at the November-end.

In November, urea sales of Fauji Fertilizer, Engro Fertilizer and Fauji Fertilizer Bin Qasim fell 24, 28 and 49 percent year-on-year, respectively, the brokerage reported, citing the data of the National Fertilizer Development Centre. Fatima Fertilizer, however, recorded an impressive 90 percent year-on-year jump in sales during the last month.

“Fatima was the only standout performer as its closed plant restarted operation, working at 95 percent of plant efficiency,” Zamin added. In November, Fauji Fertilizer Bin Qasim, Fauji Fertilizer and Engro Fertilizer recorded 55, 49 and 33 percent decline in DAP sales. DAP inventory levels clocked in at 529,000 tons till November-end.