‘Fertiliser supply expected to stay above demand’

LAHORE: Fertiliser supply is expected to remain well above the demand during summer crops due to increase in production spurred by resumption in gas supply to manufacturers, it was learnt on Tuesday.

Urea availability during kharif 2021 is estimated to be around 3.5 million tonnes comprising 298,000 tonnes of the previous season left over and local production of 3.2 million tonnes, according to a document of National Fertilizer Development Centre (NFDC). Total urea offtake is projected to be around 3 million tonnes during kharif. There will be 496,000 tonnes of reserve stock for next winter crops 2021/22, according to the document.

Kharif started with diammonium phosphate (DAP) opening balance of 55,000 tonnes. Domestic production during the season is estimated to be 426,000 tonnes and imported supplies of 676,000 tonnes. Total availability of DAP will be around 1.1 million tonnes. The demand of DAP during kharif, 2021 is estimated around 1 million tonnes. A reasonable quantity of nitrogen phosphate, single superphosphate and other phosphatic fertilisers would also be available to meet the demand of summer crops, according to the

Urea and DAP offtakes more than doubled in May compared to the same month a year earlier due to robust agronomics, analyst Hammad Hussain at Optimus Capital Management said. “Low base effect from last year partially contributed towards the overall robust growth in sales. Fundamentally, higher crop prices and real farmer earnings have increased consumer appetite for farm inputs, including urea,” said Hussain. “Limited import activity by traders/importers amid elevated prices is partially to be blamed for low inventory.”

Urea offtake was 501,000 tonnes, 109.3 percent year-on-year in May. DAP offtake was 173,000 tonnes, up 184.7 percent.

Offtake of urea seems high due to low offtake during May as a result of COVID-19, said the NFDC document. Increase in offtake of DAP is due to upward trend in prices in both domestic and international market.

Domestic prices of urea (sona) and urea (other) decreased slightly by 0.3 per cent each in May compared with previous month. Prices of NP, SSP (G), calcium ammonium nitrate and sulphate of potash increased by 1.5, 0.6, 0.4 and 1.3 percent, respectively as compared with previous month.

Price of DAP and NPK [nitrogen, phosphorus, and potassium] increased 1.1 percent each. China urea price was quoted at $332-380/tonne. Middle East bulk urea was at $330- 385/tonne. DAP prices were in the range of $527-577/ton bulk in Australia and $533-545/tonne in China market. Ex-Karachi price of imported urea was in range of Rs3,436 to 3,961 per 50 kg bag and DAP was in rage of Rs4,774 to 5,184 per 50 kg bag.

In May, urea production was 598,000 tonnes (72.1 percent share in total production). Other products were DAP 75,000 tonnes, CAN 67,000 tonnes, nitrophos 74,000 tonnes, SSP 6,700 tonnes, NPK (various grades) 8,000 tonnes and SOP 900 tonnes. Total imported supplies were 114,000 tonnes.

Total nutrient offtake during the first two months of April-May was 626,000 tonnes of nutrients, up 42.2 percent year-on-year. Nitrogen offtake increased 57.3 percent. Phosphate offtake also increased 5.5 percent while potash offtake increased 31.9 percent respectively. Urea offtake was 811,000 tonnes, up 68.2 percent while DAP offtake was 219,000 tonnes, up 3.5 percent over the previous comparable period.