Pakistan Fertilizer – Urea sales dipped 6%yoy in Jul’19

        Urea offtake for the industry in Jul’19 has clocked in at 465K tons, down 6%/28% yoy/mom. The decline in offtake is possibly due to pre-buying in Jun’19 amid anticipation of increase in Urea prices the post hike in gas prices.

•        On a cumulative basis, Urea offtake increased by 4.0%yoy to 3.4mn tons for 7MCY19; offtake for EFERT, FFC and FFBL declined by 8%, 6%, 20% yoy respectively.

The incumbents witnessed market share attrition as imports and LNG based manufacturers together reached 13% (430k tons) of market share during 7MCY19.

•        Ending Inventory levels clocked in at 382k tons, up 4.4x yoy. The increase in inventory levels was supported by (i) 76k tons of production from LNG based producers, and (ii) 100k tons of urea imports.

•        DAP offtake in Jul’19 continued to decline to 202k tons, down 33%yoy. On a cumulative basis, DAP offtake declined to 14%yoy to 848k tons in 7MCY19, mainly due to the significant rise in DAP prices amid PKR depreciation. Inventory levels stood at 412k tons, up 15% yoy where FFBL and FFC together hold 72% of the inventory.

•        Given LNG based production of 700k tons (assuming smooth operations of these plants) till Oct’19, urea availability across CY19f is likely to reach 6.3mn tons, in our view. Assuming urea demand remains stable at 5.8mn tons, closing urea inventory will reach 0.5mn tons which is unlikely to create major supply concerns, in our view. However, continued operations of these LNG based plants beyond Oct’19 may start building up pressure on urea prices. (Courtesy – Intermarket Securities Limited.)

Product-wise Offtake

       
 

Jul-19

Jul-18

yoy

Jun-19

mom

  

Urea

         

  

Opening Inventory

177,694

104,631

70%

266,412

-33%

  

Production

565,877

478,105

18%

557,618

1%

  

Import

100,972

  

Total Available

844,543

582,736

45%

824,030

2%

  

Offtake

465,241

496,634

-6%

642,577

-28%

  

Closing Inventory

381,767

86,102

343%

177,694

115%

  

DAP

         

  

Opening Inventory

504,033

405,544

24%

50,378

901%

  

Production

76,595

73,321

4%

71,162

8%

  

Import

32,800

182,213

-82%

82,856

-60%

  

Total Available

613,428

661,078

-7%

657,196

-7%

  

Offtake

202,033

301,790

-33%

57,743

250%

  

Closing Inventory

411,815

359,393

15%

504,033

-18%

  

Source: NFDC

         
             


 

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