KARACHI: National Fertilizer Development Center (NFDC) released fertilizer data for the month of February 2019 where Pakistan’s total fertilizer offtakes clocked-in at 520k tons, depicting a significant decline of 16% YoY.
Industry urea sales for February 2019 increased 5% YoY to 388k tons compared to 370k tons in the same month last year. “The increase in urea sales is mainly attributable to higher offtake from Fatima Fertilizer and Agritech during the month. However as expected, urea sales were down 31% MoM due to the seasonality factor,” a report issued by Pearl Securities noted.[the_ad id=”31605″]With regards to company wise performance, urea offtakes for Fauji Fertilizer (FFC) arrived at 170k tons, up 8% YoY in February 2019 whereas Engro Fertilizer (EFERT) clocked-in sales of 131k tons (-10% YoY) & Fatima recorded offtakes of 52k tons (+38% YoY). Consequently, market share of FFC, EFERT & FATIMA arrived at 44%, 34% & 13% respectively in February 2019.
With respect to inventory levels, urea inventory for the industry plunged 80% YoY/24% MoM to 54k tons during February 2019 as against 271k tons in February 2018 and 71k tons in January 2019, with FATIMA accumulating nearly two-thirds of total industry inventory at February 2019.
Industry DAP off-takes declined 60% YoY to 49k tons during February 2019 as higher prices continued to impair DAP demand. EFERT, Fauji Fertilizer Bin Qasim (FFBL) and FFC DAP offtakes declined 22%, 72% and 84% YoY respectively. EFERT extended its run in February 2019 as the leading DAP provider for the second month in a row with market share of 29% mainly on account of induction of new dealers & increased penetration in Punjab. FFBL and FFC followed up with market share of 24% & 16% respectively during February 2019. On the inventory front, lower DAP offtake has led to an inventory glut with February 2019 DAP inventory arriving at 508k tons (+136%YoY/+4%MoM) in February 2019.
In terms of pricing, local urea and DAP prices stayed flat at Rs1,740/bag and Rs3,570/bag respectively during February 2019. However, in a recent development, urea price has been increased to Rs1,820/bag by FFC whereas other market players are also contemplating to follow suit.
International urea prices stayed flat in February 2019 at US$407/ton mainly on account of weak global demand, particularly from India, which is expected to persist in the short-term, thereby keeping international urea prices under pressure in the upcoming months. International DAP prices also remained relatively flat at US$513/ton in February 2019 as compared to US$508/ton in January 2019.
“With regards to outlook for fertilizer offtakes, we expect urea sales to remain resilient during the year whereas DAP sales are expected to decline owing to considerable rise in prices. Regarding pricing outlook, urea prices are likely to remain near Rs1800/bag in the current fiscal year whereas with DAP demand already being affected by higher prices, no further increase in DAP prices is expected during FY19,” Pearl Securities report said.