KARACHI: The nation’s fertiliser industry relating to urea and also DAP sales uploaded outstanding growth in May, but urea inventory degrees of these products remained in adverse area during January-May 2021.
Urea offtake grew 109 percent to 501,000 tonnes in May compared to 240,000 tonnes in May 2020. While month-on-month urea sales were 62 per cent higher than 309,900 tonnes in April.
Pricing estimate the numbers of National Fertilizer Growth Firm (NFDC), research study expert at BMA Capital Management, Noor Huda Shaikh claimed urea sales in 5MCY21 expanded by a whooping 47pc to 2.2 m tonnes from 1.5 m tonnes in the exact same period in 2014.
DAP offtake swelled by 185pc to 173,000 tonnes in May from 61,000 tonnes in May 2020 while its sales grew 279pc growth from 46,000 tonnes in April.
A rise of 26pc was recorded in DAP sales in 5MCY21 to 533,000 tonnes from 422,000 tonnes in the same duration in 2015.
The country’s urea inventory dived by 45pc during May to 612 tonnes from 1.116 m tonnes in May 2020 yet urea supply of the month was 15pc even more from 531,000 tonnes in April.
Commenting on the reasons of rising urea and also DAP sales as well as urea inventory expectation, Noor Huda connected climbing urea and also DAP sales to improved agronomics and low base effect.
He said urea offtake rose in May as a result of resumption of RLNG based plants in March, while urea production continued its uptrend.
He remembered that urea quantities during May 2020 were reduced because of delayed purchases by farmers in anticipation of materialisation of subsidy approved by ECC in the very same month which included a relief of Rs243 per bag on urea. Sequentially urea sales had enhanced by 62pc due to the beginning of Kharif season.
Noor stated DAP sales reached new high throughout 5MCY21 as well as on the rates front, DAP rates are still floating at high levels between Rs 5,500-5,600 per bag as international DAP costs continued their favorable pattern because of long term supply problem (current prices at $570/tonne, up 48pc present year to date).
He kept in mind that phosphoric acid rates are additionally on an uptrend ($998/tonne, up 45pc current year to information). Provided the supply discrepancy, he expected that the phosphate market to continue to be solid in the close to term.
Urea inventory enhanced by 15pc to 0.61 m tonnes in Might contrasted to April owing to resumption of RLNG supply to shut fertiliser plants in March. This is still reasonably lower contrasted to the stock level of 1.12 m tonnes in the very same period in 2015.
He said supply would certainly normalise by the end of the year and also would clock-in between 0.35-0.40 m tonnes in December. Nonetheless, with the looming RLNG situation in the middle of feasible closure of Engro’s LNG terminal because of maintenance factors, the government may stop supply to LNG-based plants to preserve gas tons, which would even more decrease supply levels and maintain prices power of fertilizer players intact.
In addition, the gap between regional and global urea costs has better broadened with widespread regional costs in the nation nearing Rs1,740 per bag, whereas worldwide costs are hovering at $450 per bag (landed equal to Rs4,600 per bag).
This keeps the industry players in a favourable position to pass the effect of surge in gas costs or other input costs, Noor stated.