Urea offtake in May 2026 remained flat YoY (-10% MoM) at 419K MT

IMS Research has published a report on Pakistan Fertilizers regarding fertilizer sales. Urea offtake in May 2026 remained flat YoY (-10% MoM) at 419K MT, while DAP volumes dropped 36% YoY (-28% MoM) to 61K MT. Despite the recovery in farm incomes, volumes remained flat YoY, largely driven by channel stuffing, with dealers front-loading purchases ahead of the anticipated rollback of discounts in December 2025 and March 2026. 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. The cumulative Urea/DAP offtake is up 9/29% YoY in 5MCY26.

Key highlights:

§ FFC: The company’s urea offtake outperformed the industry, up 24% YoY, led by 26% YoY growth in Sona Prilled and a 17% YoY rise in Sona Granular. The outperformance reflects limited channel stuffing at FFC: with smaller discounts on offer than peers, it saw less inorganic pre-buying. Meanwhile, DAP offtake declined 44% YoY to 38K MT, primarily due to farmers switching to cheaper phosphate sources amid rising DAP prices. FFC’s cumulative market share in 5MCY26 for urea/DAP stands at 57/64%, up 9/2ppt YoY.

§ EFERT: Urea sales fell a sharp 69% YoY (-60% MoM) to 43K MT. The drop primarily reflects pre-buying in December 2025 and March 2026, ahead of the anticipated withdrawal of the heavy dealer discounts, which have left the channel carrying elevated Engro urea inventory. EFERT’s DAP sales declined 49% YoY (-10% MoM) to just 7K MT. EFERT’s cumulative market share in 5MCY26 for urea/DAP stands at 22/13%, down 5/8ppt YoY.

§ Closing Inventory: Industry’s urea stock rose 21% MoM to 971K MT, the highest since November 2025. EFERT holds 616K MT of urea stock (63% of the overall industry’s inventory), while FFC and FATIMA hold 113K and 222K MT, contributing 12% and 23%, respectively.

Underlying farm economics are improving, supported by stronger wheat prices this season. Near term, however, that tailwind is being offset by the pre-emptive buying seen in late 2025 and early 2026, which front-loaded demand and is now weighing on current offtake. That said, FFC stands out, with volumes outperforming the broader sector. We maintain FFC as our top pick, with a December 2026 target price of PKR638/sh. Our preference reflects FFC’s dominant industry position (highest market share and low-cost feedstock gas), a strong balance sheet, and a diversified earnings base that provides a natural hedge against the sector’s inherent seasonality.