Urea sales seen jumping 8% to 622,000 tonnes in July

LAHORE: Pakistan’s urea sales in July are likely to clock-in at 622,000 tonnes, up 8 per cent (year-on-year), as the dealers and farmers started buying the commodity on the fears of an increase in the commodity prices.

Earlier, the government had announced to raise the prices of urea by Rs50/bag from August 1, 2021. However, the same is expected to decline 10 per cent on a month-on-month basis, mainly due to the seasonal factors.

As a result, urea sales in the seven months of 2021 are expected to clock-in at 3,521,000 tonnes, compared with 3,246,000 tonnes in the seven months of 2020, up 8 per cent YoY.

Sunny Kumar, an investment analyst at Topline Securities, said that the Fauji Fertilizer Company (FFC) and Fauji Fertilizer Bin Qasim Limited (FFBL) are expected to post an increase in urea sales by 113 per cent YoY and 57 per cent YoY, respectively, amid low base.

“In July 2020, Engro Fertilizers sales had increased 91 per cent YoY, as the company captured [the] lost market share by reducing its prices to take it in line with other players,” Kumar said.

The urea production in July is expected to increase 3 per cent YoY to 512,000 tonnes owing to the resumption of production by the liquefied natural gas (LNG)-based plants. It is likely to take the commodity’s closing inventory to around 322,000 tonnes, he added.

“[The] total DAP sales during July are anticipated to clock-in at around 193,000 tonnes, down 22 per cent YoY due to a high base of 247,000 tonnes,” the investment analyst said.

The industry has recorded higher DAP sales during July 2020 after the clarification that the subsidy will start from the Rabi season (October 2020).

He said the company-wise data suggests, the Fauji Fertilizer Bin Qasim Limited and Engro Fertilizer are likely to record sales of 93,000 tonnes and 36,000 tonnes, respectively; followed by Fauji Fertilizer Company’s sales of 26,000 tonnes.

The FFBL’s DAP production is expected at 74,000 tonnes, taking the closing inventory of DAP to around 405,000 tonnes.

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