Pakistan Fertilizers Sector update May'17
Fertilizer offtake remained promising in May'17 on arrival of Kharif season coupled with continuation of fertilizer subsidy package in Budget FY18. According to latest figures released by NFDC, total fertilizer sales in May’17 stood at 718k tons against 478k tons sold in May'16 (up 50%YoY/60%MoM). Similarly, urea sales have also increased by 2.07xYoY/2.08xMoM to 521k tons during the month under review. Furthermore, imported urea sales showed some strength (24k tons in May’17 vs. 2k tons in Apr’17) due to availability at a significant discount to local urea. DAP sales on the other hand registered a decline of 35%YoY/28%YoY to 69k tons in May'17. On a cumulative basis, total fertilizer sales posted growth of 25%YoY to 2.70mn tons during 5MCY17 where urea offtake posted a decent recovery of 33%YoY to stand at 1.64mn tons. In the backdrop of lower fertilizer offtake along with industry's weak pricing power & rising inventory levels (urea inventory standing at 1.70mn tons), we maintain our Marketweight stance on the sector until a sustainable improvement in the demand scenario emerges.
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