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June 27, 2019

Urea sales up 20 percent in May

Business

June 27, 2019

KARACHI: Domestic urea sales have increased by 20 percent in May on year-on-year basis to 593,000 tons, National Fertilizer Development Centre data showed.

Industry’s urea production increased by 138,000 tons to 527,000 tons, up 35 percent YoY due to resumption of operations by Dawood Hercules and Agritech Limited, an analyst report of BIPL Securities said on Wednesday. The off take increased twofold, which was primarily attributed to the demand emanating from the ongoing kharif season.

This uptick in production was majorly driven by Engro Fertilizer that posted a growth of 66 percent YoY and resumption of operations by Dawood Hercules and Agritech Limited, which produced approximately 44,000 tons and 34,000 tons, respectively.

DAP sales in May 2019 witnessed an increase of 263 percent YoY and 147 percent month-on-month, NP sales increased 51 percent YoY and 5.0 percent MoM, whereas CAN sales declined by 21 percent YoY and six percent MoM.

This growth was led by Fauji Fertilizer Bin Qasim Limited (FFBL), which posted a hefty volumetric growth of over 10 times YoY in the period under review. However, 5MCY19 cumulative sales have decreased to 488,000 tons depicting a meagre decline of one percent YoY.

Cumulative sales for five months of 2019 inched up by 6.0 percent YoY, where industry off take in the reported period clocked in at 2.2 million tons. Company wise analysis reveals that FFBL posted the highest increase in urea sales, posting a growth of 31 percent YoY, where the off take clocked in at 79,000 tons in May 2019.

During May 2019, urea inventory declined by 19 percent to 266,000 tons as opposed to 329,000 tons during the same period last year. DAP inventory, on the other hand, increased to 503,000 tons during the period under review against 387,000 tons during the corresponding period last year, up by 30 percent YoY. This was led by FFBL where it’s ending stock increased by 140 percent YoY.

Oil and Gas Regulatory Authority (OGRA) has proposed to increase the gas rate for both feed and fuel by 62 percent and 31 percent to Rs300/mmbtu and Rs1,021/mmbtu, respectively, which implies a cost hike of Rs195/bag.

Due to availability of concessionary gas, Fatima and Engro Fertilizer would benefit in case of complete pass on.However, FFBL would lose due to its exposure towards DAP business, where the prices follow the trend of international DAP prices, a BIPL Securities report said.

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