KARACHI: National Fertilizer Development Center (NFDC) released fertilizer data for the month of May’19 wherein total fertilizer offtakes clocked-in at 940k tons, depicting a hefty increase of 40%YoY whereas offtakes were up 84%MoM.
“Industry urea sales for May’19 incremented 20%YoY to 593k tons compared to 494k tons during the same month last year owing to pre-buying prior to anticipated price hike in urea prices post budget,” a report issued by Pearl Securities noted.
In terms of MoM performance, urea sales for the industry surged 103% while aggregate industry production increased 35%YoY to 527k tons compared to 389k tons during May’18.
With regards to company-wise performance, Engro Fertilizer (EFERT) recorded slender increase of 3%YoY/0%MoM at 141k tons whereas Fauji Fertilizer Company (FFC) sales clocked-in at 271k tons (+5%YoY/+206%MoM). Moreover, Fauji Fertilizer Bin Qasim (FFBL) registered 31%YoY/178%MoM rise in urea off-takes at 79k tons while Fatima Fertilizer incremented its sales 84%YoY/188%MoM at 71k tons during the month.
Consequently, market share of FFC, EFERT, FFBL & FATIMA arrived at 46%, 24%, 13% & 12% respectively during May’19.
In terms of urea inventory levels, aggregate inventory for the industry declined 19%YoY/21%MoM at 266k tons during May’19, with FFC & FATIMA constituting a significant proportion (69%) of total industry inventory.
“Industry DAP offtakes rose 263%YoY to 213k tons during May’19, primarily due to forward buying from dealers in anticipation of rise in prices as a result of significant PKR devaluation & anticipated rise in prices post budget,” Muhammad Ahmed at Pearl Securities said.
Company-wise DAP offtakes depicted notable increase for all major players as EFERT’s sales surged 151%YoY to 60k tons whereas FFC & FFBL exhibited hefty rise of 191%YoY & 923%YoY at 34k & 77k tons respectively. Moreover, FFBL continued its position as the leading DAP provider in the country with market share of 36% whereas EFERT and FFC market share clocked-in at 28% & 16% respectively during May’19.
On the inventory front, DAP inventory level decreased to 503k tons, exhibiting a decline of 19% compared to April 2019. However, on a YoY basis, inventory level was 30% higher compared to corresponding month of last year.
As expected, urea prices stayed stagnant at PKR1,830/bag during the month whereas DAP prices stayed in the range of PKR3,550-3,650/bag. Moreover, during May’19 international urea prices rose 4%YoY to US$286/ton while international DAP prices declined 10%YoY to US$369/ton.
With petroleum division seeking an increase of 62%/31% in feed/fuel stock gas price from July 2019 onwards, approval of aforementioned price increase would result in cost hike of PKR191/bag for manufacturers (excl. EFERT/FATIMA) which may consequently lead to further rise in fertilizer prices.
“Going forward, with fertilizer prices anticipated to rise from July 2019 onwards, we expect growth in offtakes for upcoming months to remain subdued as higher domestic prices, persistent PKR devaluation and weak farm economics will impair fertilizer demand. However, implementation on budgetary measures such as livestock program for farmers, development of water infrastructure, focus on enhancing agri-yield etc. could provide some impetus to country’s agri-growth during the upcoming fiscal year,” Ahmed said.