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Urea sales up 3pc, DAP down 19pc (Daily DAWN)


Urea sales up 3pc, DAP down 19pc

Our Equities Correspondent | Business | From the Newspaper
In the face of greater demand in the Rabi season, gas issues were feared to cause a shortfall in supply. - File photo

KARACHI: Fertiliser sector is in the eye of the storm regarding availability and pricing of urea for the Rabi season. On Friday, the National Fertiliser Development Centre (NFDC) released monthly off-take and production numbers.
In January-October 10 months (10MCY11) overall indutry off-take showed a sharp drop of 10 per cent to 5.896 million tons, from 6.570 million tons in the corresponding period of the previous year.
Urea off-take witnessed an upsurge of 3 per cent to 4.760 million tons from 4.618 million tons in the same period last year. On the other hand, DAP off-take dipped by 19 per cent to 0.849 million tons over 1.052 million tons.
On monthly basis, total fertiliser off-take improved by 3 per cent in October to 0.803 million tons, compared with 0.776 million tons in the same month last year.
Urea off-take declined by 1 per cent to 0.518 million tons from 0.524 million tons a month ago.
On the other hand, DAP off-take registered a sharp increase of 65 per cent to 0.204 million tons as against 0.124 million tons in September last year.
The reason for decline in urea on MoM basis was generally known to be due to prolonged shut-down of SNGPL based plant and persistently low availability of gas to the urea producers.
In the face of greater demand in the Rabi season, gas issues were feared to cause a shortfall in supply.
In the 10 months under review, total production of urea declined by 4.22 per cent to 4.085 million tons, compared to 4.265
million tons in the same period last year while urea imports were also noted to have declined by 38 per cent to 616.23 thousand tons against imports of 993.62 thousand tons in 10 months of last year.
Research analyst, Sarfraz Abbasi at Summit Capital stated that the trend led to insufficient inventory availability for the Rabi season. In his report on the sector released on Thursday, the analyst commented: “It seems that the government may prefer to bridge the demand supply gap through imports as it recently imported 50,000 tons of urea at a price of US$538 per ton, translating into Rs2,327 per bag”.
Moreover, the government had also awarded urea import contracts for the import of 440,000 tons at $540.75 per ton (Rs2,352 per bag). Analyst Abbasi contended that following price increase roll back of Rs400 per bag by Engro Corporation, local per bag urea prices stood at Rs1,362 (ex-GST) which was substantially lower than prevailing urea prices in international market. The analyst thought that urea prices could go further up in international markets as India and Pakistan enter for imports.
Thus, prices of urea which in world markets were currently hovering at around $545 per ton were feared to rise over $550-555 per tons.
“We believe that the higher urea import would further swell the  import bill”, said the analyst, adding that as a result of lower production and lower imports price manipulators would have a field day in hoarding, black-marketing and pushing the urea bags in the market at phenomenal prices, which could lead to lower usage of fertiliser and lower crop yield.”
The analyst calculated that average urea prices were up 65 per cent at Rs1,393 per bag (ex-GST) in October from Rs845 per bag in January. In the 10 months under review, average DAP prices rose 48 per cent from Rs2,587 to Rs3,835 per bag.

http://www.dawn.com/2011/11/26/urea-sales-up-3pc-dap-down-19pc.html

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