The Govt and urea industry yet to decide about prices

Fauji Fertilizer Bin Qasim (FFBL) while commenting on the news report regarding the reduction in urea prices, management has denied they have not agreed with the Government to reduce urea prices. However, they are still in talks with Government on this matter.

Management anticipates that for 2022 Urea off takes will clock in around 6.4mn tons compared to 6.3mn tons in 2021. Similarly DAP offtakes are expected to remain in the range of 1.6-1.8mn tons compared to 1.9mn tons amidst higher prices.

Company performance

The Company had announced its 1Q2022 unconsolidated earnings of Rs1,627mn (EPS: Rs1.26), up 28% YoY. The improvement in results was attributed to improved DAP margins, an increase in urea offtakes and an increase in net treasury income. The Company managed to post the highest ever-unconsolidated revenue, gross profit and net profit in 1Q2022.

The Company has improved its DAP production to 0.2mn tons in 1Q2022, up 82% YoY due to improvement in natural gas supplies. FFBL usually shuts its plant for an annual turnaround in January.

Global DAP prices continued to increase, and the latest DAP (CFR) import price in Pakistan is US$1,025/MT. DAP prices have increased significantly due to higher prices of raw materials, Chinese Export restrictions and the Russia-Ukraine war.

FFBL’s increased its DAP prices by Rs500/bag while the current DAP price (ex-factory) stands at Rs10,600/bag. At the same time, FFBL’s Urea Dealer Transfer prices stand at Rs1868/bag, lower than EFERT’s urea prices. To highlight, EFERT has increased their urea prices by Rs100/bag in Apr-2022.

For 2Q2022, Company is being quoted prices of US$2050/MT for Phosphoric acid (raw material of DAP). But this price has not been finalized yet.

The Company has used a mixed inventory of imported and afghan coal in 1Q2022. Still, the currently, Company is holding stock at a cheaper rate than international coal prices. The availability of afghan coal in the southern region is an issue, along with increased freight costs.

Courtesy- AHCMA Research


Posted in Fertilizer & Petrochemical Industries.

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