Lahore – The country’s total fertilizer off-take during March 2016 fell by 49 percent to 279,000 tons.
Urea which is the most used fertilizer in Pakistan witnessed massive 73 percent drop, due to weak farmer demand.
On the other side, DAP sales grew by 80 percent, thanks to subsidy of Rs500/bag. Latest data shows that despite lower retail prices and discounts on top of that, EFERT, FFC and FATIMA off-take dropped by 88 percent, 72 percent and 89 percent, respectively.
Experts blame, weak farmer purchasing power for the decline in demand. Further, imported Urea off-take dipped by 95 percent due to excess local supply and farmers’ preference for local branded Urea.
However, on DAP front FFBL (only DAP producer in Pakistan) sales grew by 19 percent to 34k tons, while imported fertilizer off-take surged by 1.7x to 52k tons.
Cumulatively in 3MCY16, Urea sales have plunged 49 percent to 770k tons, while EFERT and FFC sales bearing the major brunt declining 53 percent and 48 percent respectively.
While, DAP sales remained strong on the back of subsidy, growing by 28 percent to 234k tons, with imported DAP surging 39 percent due to very low prices, whereas FFBL sales up meager 3 percent.
Pakistan Urea inventory increased to 1.2mn tons (vs.0.8mn tons in Feb 2016), in which NFML holds 277k tons of imported Urea.Similarly, country DAP inventories clocked in at 285k tons (vs.269k tons in Feb 2016), where FFBL carries 114k tons.
As per channel checks, demand remained subdued in April 2016 due to i) deteriorating farmers’ buying power owing to losses suffered on crops, ii) excess supply on the back of better gas availability to Agritech, Pak Arab and DH Fertilizer plants, and iii) expectation of price decrease .
Going forward, it is expected demand to pick up pace in May 2016 as sowing of Kharif crops starts in coming months.Further, Govt. would extend currently exhausting subsidy on DAP and may also reduce gas prices for fertilizer sector to provide relief to the agriculture sector, which is the backbone of the country’s GDP. However, the company has not declared any dividend, likely due to liquidity issues and upcoming foreign investment.
Source: The Nation