KARACHI: National Fertilizer Development Center (NFDC) released fertilizer data for the month of March 2019 wherein total fertilizer off-takes clocked-in at 540k tons, depicting a decline of 6% YoY.[the_ad id=”31605″]Industry urea sales for March 2019 improved 19% YoY to 408k tons compared to 342k tons during the same month last year. The increase in urea sales is mainly attributable to higher offtakes from Engro Fertilizer (EFERT) during the month owing to improved channel management in Punjab. In terms of MoM performance, urea sales rose 5% during March 2019.
With regards to company wise performance, urea offtakes for Fauji Fertilizer Company (FFC) remained flat at 194k tons (+1% YoY) during the month whereas EFERT clocked-in sales of 147k tons, registering an impressive 64% YoY growth.
Moreover as expected, Fatima Fertilizer (FATIMA) continued to record stupendous growth of 150% YoY to 29k tons. Consequently, market share of FFC, EFERT & FATIMA arrived at 48%, 36% & 7% respectively during March 2019.
In terms of urea inventory levels, industry’s inventory declined 64% YoY whereas on a MoM basis, inventory levels were 148% YoY higher at 135k tons during March 2019, with FATIMA again constituting a major proportion (49%) of total industry inventory during March 2019.
Industry DAP off-takes declined 56% YoY to 65k tons during March 2019 as higher prices and Rabi season nearing conclusion continued to impair DAP demand. Company wise sales performance presented a mixed picture in March 2019 as DAP offtakes for Fauji Fertilizer Bin Qasim (FFBL) & FFC declined heavily by 70% and 78% YoY respectively, whereas DAP offtakes for EFERT increased significantly by 44% YoY to 29k tons.
Moreover, EFERT extended its run in March 2019 as the leading DAP provider for the third month in a row with market share of 44% mainly on account of induction of new dealers and increased penetration in Punjab. FFBL and FFC followed up with market share of 23% & 15% respectively during March 2019.
On the inventory front, lower DAP offtake has led to an inventory glut as March 2019 DAP inventory levels arrived at 599k tons (+220%YoY/+18%MoM).
With respect to urea prices, FFC increased price by PKR 80/bag to PKR 1,820/bag during the month whereas EFERT delayed hiking urea prices till start of April 2019. International urea prices declined 4% YoY during March at US$ 269/ton mainly on account of weak global demand, particularly from India, which if persisted, could keep international urea prices under pressure in the upcoming months.
Moreover, international DAP prices remained flat at US$ 399/ton in March 2019 as compared to US$ 397/ton in March 2018.
“We expect urea sales to improve in the upcoming months owing to onset of Kharif season whereas DAP sales are expected to remain under pressure owing to considerably higher prices, thereby affecting demand. Regarding pricing outlook, despite ECC allowing 100k tons of urea owing to weak industry inventory levels, we expect local urea prices to remain near PKR1820-1830/bag in FY19 whereas with increasing supply of DAP from China and restricted demand from India, we foresee international prices for DAP to decline, which could lead to further price cuts in local DAP prices and consequently provide some support to weakening demand,” a report issued by Pearl Securities said.