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Fertiliser sales up 9pc to 558,000tns in April


May 29, 2020

KARACHI: Fertiliser sales rose nine percent year-on-year to 558,000 tons in April as offtakes of diammonium phosphate (DAP) significantly grew due to lower prices, brokerages reported on Thursday.

In April, DAP sales surged 75 percent year-on-year to 151,000 tons because of pre-season demand, while prices fell seven percent to Rs3,400 from Rs3,600 in December last. Sales of calcium ammonium nitrate, nitro phosphate and nitrogen, phosphorus and potassium grew 23, 24, and 10 percent, respectively, according to Taurus Securities.

Urea off-takes for April fell to 242,000 tons from 292,000 tons, down 17 percent year-on-year.

Analyst Mustafa Zamin attributed the downward sales to heavy buying in previous months amid the anticipated hike in prices.

Company-wise, volumes were up 34 percent for Fauji Fertilizer. All other players witnessed a declining trend with Engro Fertilizer, Fauji Fertilizer Bin Qasim and Fatima down 41, 36 and 12 percent, respectively. Phosphate segment witnessed growth mainly due to fall in DAP prices. Sales of Fauji Fertilizer Bin Qasim, Fauji Fertilizer and Engro Fertilizer grew 1.6, 0.9 and 1.4 times, respectively.

Hammad Hussain, analyst at Optimus Capital Management said urea offtake fell sharply due to supply chain disruptions during late Kharif harvesting and limited labor availability for rabi season due lockdown.

“The urea market’s dismal performance could be attributed to significant volatility in prices and speculation of further cuts in the offing and lack of migrant labor for rabi crops,” said Hussain. “Production, on the other hand, registered increase of 2 percent year-on-year due to improved gas availability and 7,000 tons incremental production from Pak Arab Fertilizer, which restarted in January 2020. The mismatch between production and offtake caused producer inventory to balloon to 860,000 tons, the highest since November 2019.”

Urea stock stood at 860,000 tons as of April-end, compared to 592,000 tons last month. DAP stocks stood at 417,000 tons, down 17 percent month-on-month.

“We expect higher inventory levels to drop following the subsequent increase in demand,” said Zamin. “Urea demand will get support from uniform prices following the announcement by Engro Fertilizer to reduce its urea prices.”

Government announced an agriculture support package of Rs37 billion to support farming during the summer season, offering a subsidy of Rs243/925 per bag on urea and DAP via scratch cards. The agriculture package was part of the Rs100 billion, earmarked out of the Rs1.2 trillion coronavirus relief package, for small and medium enterprises and the agriculture sectors. In January-April, DAP sales increased 31 percent to 361,000 tons. Fauji Fertilizer Bin Qasim saw DAP sales surge 1.7 times during the first four months of the current calendar year. Fauji Fertilizer Engro Fertilizer saw DAP sales fall 10 and 29 percent, respectively.