KARACHI: National Fertilizer Development Center (NFDC) released fertilizer off-take numbers for the month of October 2018, wherein total fertilizer off-takes arrived at 1.11 million tons, exhibiting an increase of 21 percent.
Industry urea sales for the month of October 2018 clocked in at 465k tons versus 375k tons during the same month last year, depicting an increase of 24 percent. “The increment in urea off-takes is primarily due to increased buying by dealers and farmers in anticipation of expected urea shortage amid lower inventory levels,” Bilal-ul-Haq at Pearl Securities said.
Moreover, urea production in October 2018 was recorded at 559k tons, up 27 percent due to resumption of production from the closed fertilizer plants i.e Agritech and Fatima Fertilizer.
With respect to company wise performances, Fauji Fertilizer Company (FFC) continued to outperform in terms of urea sales, grabbing a market share of 44 percent at 206k tons posting a decent growth of 10 percent during October 2018.
This was followed by Engro Fertilizer (EFERT) with a share of 31 percent at 143k tons (up 14 percent) and Fatima Fertilizer (FATIMA) at 53k tons (up 921 percent).
On a cumulative basis, industry urea off-take was recorded at 4.6 million tons during ten months (January-October 2018), up by a meager 1.0 percent as against 4.54 million tons in the corresponding period last year.
“Going forward, we expect industry urea off-take to settle in the range of 5.85-5.89 million tons for 2018, which is higher compared to our earlier expectations of 5.6-5.7mn tons,” Bilal said.
On the inventory front, urea inventories plummeted 69 percent to 212k tons in October 2018 versus 689k tons reported during the same month last year. Likewise, on a monthly basis, inventories improved by a massive 84 percent, which was due to resumption of production from Agritech and FatimaFert plant which had been closed due to gas shortage.
The cumulative production from these plants stood at 75k tons in October 2018, which contributed in improving the urea supply during the month. Moreover, in a recent development, ECC had approved import of 100k tons of urea in the ongoing Rabi season to overcome the shortfall. Around 50k tons was expected to arrive by mid of November. Hence, analysts expect industry urea inventory to further improve going forward.
IIndustry DAP off-take incremented 35 percent to 521k tons during October 2018. Moreover, on a monthly basis, DAP off-takes escalated by a mammoth 162 percent due to commencement of Rabi season.
In terms of pricing, local urea prices incremented by 3.5 percent MoM to Rs1,706/bag during October 2018. The increase in prices was made on the back of upward revision in gas prices by OGRA where feed and fuel stock gas prices have been raised by 50 percent and 30 percent, respectively. As a result, local manufacturers increased their urea prices by Rs130/bag in order to pass on the impact of cost hike. Currently, prices are trading around Rs1,740/bag for prilled urea and Rs1,760/bag for granular urea.
Moreover, local DAP prices improved by 2.7 percent MoM to Rs3,520/bag during October 2018. This was mainly due to the impact of cost hike resulting from rupee depreciation. At present, DAP prices are hovering around Rs3,500/bag for imported DAP and Rs3,600/bag for Sona DAP.
On the global front, DAP prices slowed down in October 2018 averaging at $435/ton as against $439/ton last month due to sluggish DAP demand in countries at East and West of Suez Canal.
“Going forward, we expect phosphate prices to remain soft in the near-term as global demand appears to be thin,” Bilal added.