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Fertiliser sales record growth in August (Daily Dawn)


Fertiliser sales record growth in August

From the Newspaper | Business | By Our Equities Correspondent

KARACHI, Sept 30: In the last two days, most brokerage houses (BMA, InvestCap, JS, KASB, Summitcapital, Topline and others) have come up with reports on the fertiliser sector following the release of monthly off-take numbers for August 2011 by the National Fertiliser Development Centre (NFDC).
Analysts at KASB commented: “So far, no progress has been made on gas curtailment issue which can reduce or eliminate need for import and ensure availability of urea from local production.
NFDC expects the government to import 0.8 million tons during 4Q11 which can potentially require a subsidy of Rs26 billion.”
Analyst Mohammad Sarfraz Abbasi at Summitcapital pointed out that among urea producers, Engro led the sector with 39pc YoY growth in off-take. FFBL and Engro posted increase of 80pc YoY and 19pc YoY respectively in DAP off-take during
8MCY11.
Asad Siddiqui at Investcapital said that urea production during August stood at 484,000 tons (up 11pc MoM), highest level of production in a single month during CYTD, mainly owing to 35pc MoM expansion in Engro’s production as ‘Engro EnVen’ and other Fertiliser plants on SNGP network received improved gas supply during the month.
The off-take numbers for August released by the NFDC showed that the total Fertiliser off-take stood at 767,000 tons, up 84pc YoY and 1pc MoM.
Analysts said that the growth was mainly attributable to low base of last year due to country-wide floods and addition of Engro’s new plant.
Consequently, cumulative off-take in 8M2011 rose to 5.1m tons, up 4pc YoY.
Urea sales rose by 84pc YoY and 15pc MoM to 556,000 tons in August.
Low base effect of last year due to country-wide floods and addition of Engro’s new 1.3 million tons urea plant this year were the main reasons for the growth in urea sales. However, cumulative off-take in 8M2011 (January-August) declined by 4pc
YoY mainly on account of enhanced gas curtailment and additional shutdown for the SNGPL powered Fertiliser plants during February-March period.
Those numbers were likely to contract going forward as winter gas load management by the government takes off.
With regard to major fertiliser manufacturers, FFC and Engro’s urea off-take improved massively to 203,000 tons (up 109pc YoY) and 150,000 tons (up 383pc YoY), respectively in August. This huge jump in offtakes was witnessed due to low base of last year and incremental sales coming in from Engro’s new plant.
FFBL’s off-take, too, improved by 12pc YoY to 36k tons.
DAP sales witnessed a significant increase of 53pc YoY as total sales stood at 77,000 tons. The increase in off-take was accounted for by a low base effect of last year which was marred by floods.
Cumulative DAP off-take in 8M2011 (January-August) witnessed an increase of 23pc YoY to stand at 521,000 tons.
DAP off-take, however, fell sharply by 42pc MoM to 77,000 tons during August. Urea off-take escalated by almost 100pc
MoM at 81,000 tons.
Bilal Qamar at JS said that his house continued to remain upbeat on the Fertiliser sector ahead of the result season. Improved offtakes along with higher fertiliser prices were likely to boost the bottom lines of the fertiliser companies. Nonetheless, gas load management in winter remained a key concern.
Farhan Mahmood of Topline commented that on the price front urea prices which increased by 12pc MoM at retail level during August could rise in October as Rabi season was round the corner.

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