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Pakistan Fertilizer_Low base effect leads to YoY increase in urea offtake, (AKD Daily, Nov 26, 2020)

• As per the data released by the NFDC, urea offtake for Oct’20 increased 5/247% MoM/YoY to 413K tons. The significant uptick in offtake on YoY basis was due to low base effect. To recall, gas price hike of 62/31% for fertilizer feed/fuel effective from Jul’19 and consequent urea price hike in Sep’19 led to a pre-buying trend in preceding months (urea price hike was on hold, in anticipation of GIDC removal).• As per the data released by the NFDC, urea offtake for Oct’20 increased 5/247% MoM/YoY to 413K tons. The significant uptick in offtake on YoY basis was due to low base effect. To recall, gas price hike of 62/31% for fertilizer feed/fuel effective from Jul’19 and consequent urea price hike in Sep’19 led to a pre-buying trend in preceding months (urea price hike was on hold, in anticipation of GIDC removal).• During 10MCY20, FATIMA led the pack with 55% YoY increase in urea offtake, followed by FFBL with 28% YoY higher urea offtake. The urea inventory at 671K tons has increased 44% MoM due to LNG supply to hitherto closed fertilizer plants, it still remains at 24% below its levels in the same period last year.• DAP offtake for Oct’20 remained flattish MoM, clocking in at 229K MT, however declined 15% YoY. This is due to lower imports of DAP on the back of an upsurge in international DAP prices. With EFERT and FFC shying away from expensive DAP imports, FFBL has come forth, accounting for 57% market share during Oct’20, up 15ppt YoY. • While phosphoric prices have recently seen an upward trend, we expect FFBL to remain at forefront in terms of DAP offtake, leading to profits on core business in 4QCY20. However, on the flipside, some of those gains are expected to be pared off by the budgetary measures discouraging sales to unregistered dealers.