Gas cut widens urea demand and supply gap (The Nation)

Gas cut widens urea demand and supply gap

Published: March 31, 2011

LAHORE (PPI) - The persistent gap between demand and supply of fertilizers has further widen as a consequence of gas curtailment in the range of 12 percent to 20 percent.

Experts said that this prevailing gap ensures demand for the locally manufactured fertilizer products which are substantially discounted (including subsidy) in comparison of international prices.

However, they believe fertilizer affordability of farmers might get hurt due to higher prices of fertilizers despite of higher agri income and availability of agri loans.

Total fertilizer offtake in 2MCY11 declined by 13 percent YoY to 1105k tons in comparison of 1272k tons in the corresponding period of last year due to lesser availability owing to gas curtailment. In terms of product, both Urea and DAP offtake reported a decline of 18 percent and 21 percent YoY respectively in 2MCY11.

However, on monthly basis, total fertilizer offtake were seen slightly lower by 3 percent YoY to 565k tons as against 581k tons in Feb ’10. On the other hand, average per bag price of Urea and DAP rose by 35 percent and 34 percent respectively due to gas curtailment and higher input cost.

All the listed players posted a decline in urea offtake where highest decline of 42 percent was observed in FFBL to 27k tons while the lowest decline of 4 percent was seen in FFC over 2MCY10. ENGRO’s urea offake also went down by 8 percent to 154k tons in 2MCY11.

DAP offtake of the listed players also remained dull as ENGRO’s DAP offtake posted a substantial drop of 36 percent YoY to 45k tons in 2MCY11 against 71k tons in 2MCY10. On the other hand, FFBL’s DAP offtake increased by 7 percent YoY in 2MCY11. At current levels, Analyst Muhammad Sarfraz Abbasi recommended Hold for FFBL and FFC.

The nation, Published: March 31, 2011

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/31-Mar-2011/Gas-cut-widens-urea-demand-and-supply-gap

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