Urea off-take posted 5pc growth

Karachi, July 25, 2019: Urea offtake during 1H2019 depicted the growth of 5 percent YoY to 2.87 million tons on the back of pre-buying by dealers/farmers amid an expected hike in urea prices as the govt. was set to increase gas prices w.e.f. July 2019. 

Furthermore, timely rain fall across the country also pushed up volumetric sales of urea, as per our channel checks. 

Among local producers, EFERT witnessed a significant decline of 10 percent YoY as in Jan 2018 the company carried an inventory of 184k tons which came down to 10k tons at the start of 2019. 

Similarly, Urea production during 1H2019 witnessed the growth of 13 percent YoY due to a resumption in production by FatimaFert and Agritech, contributing 393k tons cumulatively during 1H2019 vs. nil in 1H2018. 

Industry’s urea closing inventory for 1H2019 closed at 178k tons.

Total DAP sales during 1H2019 declined by 16 percent YoY to 572k tons due to an increase in DAP prices by over 20 percent. The largest fall of 55 percent YoY was seen in FFC to 83k tons, which was followed by FFBL -3 percent YoY to 202k tons. While EFERT witness an accretion of 6 percent YoY in DAP volumes to 185k tons. 

Key risks to the fertilizer sector included an unfavourable settlement of GIDC, poor crop season, and an increase in gas prices above our expectations.

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