Pakistan Fertilizer: Urea offtake down on high base effect
- Urea offtake for Apr’19 clocked in at 292K tons, down 35/22% MoM/YoY. The YoY decline for Apr’19 is mostly led by a large base effect, led by pre-emptive buying during Apr’18 on anticipated price hikes (Urea price increased PKR100/bag in May’18).
- EFERT remained relatively better performer, with offtake exhibiting an increase of 23%YoY, albeit declining 4%MoM. Meanwhile, Urea offtakes of FFC, FATIMA and FFBL declined by 51/48/45% YoY respectively.
- Slow offtakes combined with 14% YoY higher Urea production resulted in 1.5x MoM increase in Urea inventory to 335K tons. The government has approved 100K tons of Urea imports, and is considering to keep Fatimafert and Agritech fertilizer plants operational till Oct’19 which will likely keep Urea inventory at more than manageable levels in remaining CY19, in our view.
- DAP offtake during the month improved 32% MoM to 86K tons, but declined 28% YoY. The sequential increase is led by price discounts by various players in view of outstanding inventory stock.
- While FFBL’s DAP offtake improved 67% MoM, a YoY decline of 61/61% for Apr’19/4MCY19 remains concerning. The DAP closing inventory of 620K tons, up 2.35x YoY will continue to keep a cap on DAP player’s pricing power, deteriorating the GMs for FFBL post recent gas price hike.
Fauji Fertilizer is engaged in the manufacturing, purchasing and marketing of fertilizers including the investment in other fertilizer manufacturing operations. As of Dec 31 2004, Co. had a design capacity of 2,455,000 tonnes for urea production and 445,000 tonnes for DAP production.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
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