IMS Research has published an informative report on Pakistan Fertilizers, focusing on sales updates. Urea offtake in June 2026 remained largely flat YoY (+41% MoM) at 592K MT, while DAP volumes plummeted 58% YoY (-22% MoM) to 48K MT. Despite the recovery in farm incomes, urea volumes remained flat YoY, primarily driven by channel stuffing, with dealers front-loading purchases ahead of the anticipated rollback of discounts in December 2025 and March 2026. Sequentially, however, urea offtake rose 41% MoM, reflecting seasonality amid the ongoing Kharif season.
Meanwhile, the sharp decline in DAP offtake is primarily driven by higher DAP prices due to a supply shock amid the closure of the Strait of Hormuz. Cumulatively, offtake for both urea and DAP was up 7% YoY in 1HCY26.
Key highlights:
FFC: The company’s urea offtake outpaced the industry, rising 14% YoY, supported by c.14% YoY growth in Sona Prilled and c.12% YoY growth in Sona Granular. We believe the relatively strong performance reflects limited channel stuffing, with FFC maintaining lower trade discounts than peers during end-CY25 and early-CY26. Meanwhile, DAP offtake declined 52% YoY to 37K MT, primarily led by farmers switching to cheaper sources of phosphates due to elevated DAP prices. FFC’s cumulative market share in 1HCY26 for urea/DAP stands at 56/66%, up 8/2ppt YoY.
EFERT: Urea offtake plummeted 49% YoY (+2.4x MoM) to 106k MT, as aggressive discounting in Dec-25 and Mar-26 pulled demand forward, resulting in elevated channel inventories of Engro urea. DAP sales dropped 76% YoY (-59% MoM) to just 3K MT. EFERT’s cumulative market Urea/DAP offtake share in 1HCY26 for urea/DAP stands at 21/12, down 8/6ppt YoY.
Closing Inventory: Industry urea inventory remained elevated at 955K MT, with EFERT holding the largest share at 694K MT (73% of the total), followed by FATIMA at 181K MT (19%) and FFC at 70K MT (7%). Despite the temporary shutdown of AGL’s urea plant amid LNG disruption, we expect industry urea inventory to remain elevated over the medium term.
Underlying farm economics continue to improve, supported by firmer wheat prices this season. FFC continues to outpace peers, reflecting lower channel stuffing of Sona urea. We maintain FFC as our top pick in the sector with a target price of PKR638/share. Our positive stance is underpinned by FFC’s dominant market position (largest market share and access to low-cost feedstock gas), robust balance sheet, and diversified earnings base, providing a natural hedge against the fertilizer sector’s inherent seasonality.
