KARACHI: NFDC released fertilizer off-take numbers for the month of November 2018 wherein total fertilizer off-takes clocked in at 853,000 tons, depicting a decline of 32% YoY.
Industry urea sales for the month of November 2018 arrived at 497,000 tons as against 602,000 tons during the same month last year, exhibiting a decline of 17% YoY.
“The fall in urea off-takes is primarily attributable to preemptive buying by dealers and farmers in prior months and delayed wheat sowing,” Bilal ul Haq at Pearl Securities said.
Moreover, urea production in November 2018 was recorded at 527,000 tons, up 26% YoY due to resumption of production from two fertilizer plants namely Agritech and Fatima Fertilizer.
Based on company wise performance, Fauji Fertilizer (FFC) continued to outshine in terms of urea off-takes, clinching a market share of 41% at 206,000 tons registering a decline of 24% YoY during November. This was followed by Engro Fertilizer with a share of 28% at 139,000 tons (down 28% YoY) and FATIMA at 76,000 tons (up 90%YoY).
On a cumulative basis, industry urea off-take arrived at 5.1mn tons during 11MCY18, down marginally by 1% YoY versus 5.14mn tons in the same period last year.
“Going ahead, we expect industry urea off-take to clock in the range of 5.80-5.85mn tons in CY18,” Bilal said.
With respect to inventory levels, urea inventories plunged 51% YoY to 245,000 tons during November 2018 as against 505,000 tons during the same month last year. Similarly, on a monthly basis, inventories incremented 16% MoM which was due to resumption of production from Agritech and FatimaFert plant which had remained closed previously due to unavailability of gas. Moreover, ECC had approved import of 100,000 tons of urea during September 2018 in order to ensure sufficient supply of the commodity in Rabi season. Recently, two shipments carrying consignment of 100,000 tons of imported urea have arrived in December 2018. “Hence, we expect industry urea inventory to improve going forward”.
Industry DAP off-take plummeted 47% YoY to 265,000 tons during November 2018. The drop in off-takes was largely due to higher prices coupled with pre-buying witnessed in the prior month which was led by expectations of higher prices.
“Going forward, we expect industry DAP off-take to arrive in the range of 2.2-2.3mn tons in CY18”.
In terms of pricing, local urea prices incremented 3.0%MoM to Rs1,758/bag during November 2018. At present, prices are hovering around Rs1,740/bag for prilled urea & Rs1,760/bag for granular urea.
Moreover, local DAP prices improved by 1.7% MoM to Rs3,581/bag during November 2018. Currently, DAP prices are trading around Rs3,500/bag for imported DAP and Rs3,600/bag for Sona DAP.
“Further, as per our channel checks, DAP prices are expected to increase by Rs100/bag for imported DAP and Rs50/bag for Sona DAP from January 2019. This is likely due to the impact of cost hike resulting from rupee devaluation which has not yet been passed on to the consumers,” Pearl Securities report said.