Urea production remains stagnant at 511k tons in Dec-19

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National Fertilizer Development Centre (NFDC) has released figures for fertilizer sales and production for the month of Dec-19. The total Urea offtakes inclined by 96%YoY to 1,345k tons and 253%MoM in Dec- 19. Moreover, the production of Urea was remained stagnant at 511k tons in Dec-19. The overall off-takes of CY19 urea were up by 8% YoY to 6,228k tons similarly, production was increased by 10% to 6,170k tons. Spectrum Research expects the increase in sales was mainly due to government incentives to support the agriculture sector, boost hoarding by the middlemen, who were expecting the prices of the fertilizer to increase due to an increase in gas tariffs.

During Dec-19, FFBL, FFC, EFERT and Fatima off-take improved by 119%, 101%, 119% and 36%YoY respectively. Moreover, in CY19 off-take FATIMA increased by 29% while FFBL and FFC urea offtakes down by 10%, and 3% respectively.

DAP off-take of FFBL down by 38%YoY for the month of Dec-19, while stagnant during CY19 at 688k tons Furthermore, urea production improved by 30%YoY, 16% and 3.2% for FATIMA, EFERT, and FFC respectively in Dec-19. However, production during CY19 for EFERT augmented by 11%, while FATIMA and FFC production dropped by 32% YoY and 1% respectively.

Outlook:

Urea demand to remain strong Looking forward, we expect that fertilizer companies will continue to improve production on availability of gas and strong local demand, while the GOP might prove to be a bit stringent in their distribution of gas supply. While also considering the economic situation the middlemen might attempt to hoard fertilizer in an attempt to cash in any rise in prices, though all this depends on gas prices.

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