Pakistan Fertilizer: Sharp Increase in May 2019 Urea Sales amidst Budgetary Measures
(PDF attached)
(Jun 10, 2019)
- Pakistan urea offtake during May 2019 witnessed sharp increase of 22% YoY to 600k tons as dealers/farmers have started early buying of fertilizer products amidst possible hike in GST to normalized rate of 17% from current 2%, which will increase urea prices by Rs270 per bag, we estimate.
- Urea production during the month is expected to post record growth of 34% as last year in May 2018 EFERT’s plant was closed for maintenance. Closing inventory for May 2019 would be around 260k tons.
- Similarly, DAP sales during May 2019 is likely to shoot up by 275% to 220k tons due to the aforementioned reason.
- Among companies, Fatima Group (including DH plant) is likely to record highest growth of 111% in its offtake to 82k tons, followed by FFBL +31% YoY. Agritech is expected to record offtakes of 30k tons in May 2019 vs nil in May 2018.
- As per news reports, Govt. has also sealed urea import of 100k tons, which will be delivered in next 2-4 weeks.
- Key risks to fertilizer sector includes, 1) any unfavorable settlement of GIDC, 2) poor crop season, and 3) increase in gas prices.
Regards,
Shankar Talreja
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