EUR 4.27 For Business Accounts Only

Pakistan Fertilizer - Urea offtake to remain flat in July-2019 at 499k tons

• Pakistan urea sales for the month of Jul-2019 is expected to remain flat at 499k tons vs. 497k tons during Jul-2018. On monthly basis, industry urea sales is anticipated to fell by 22% MoM primarily due to early buying in previous month owing to expected hike in retail prices. Overall sales for 7M2019 is anticipated to clock in at 3.3mn tons; up by 5% YoY.
• Among the companies, Fauji Fertlizer Bin Qasim (FFBL) is estimated to post the highest decline of 36% YoY in its urea off-takes to 32k tons followed by Fauji Fertilizer (FFC) and Engro Fertilizer Limited (EFERT) which are projected to  post an attrition of  17% YoY and 1% YoY to 176k tons and 170k tons, respectively.
• Urea production during Jul 2019 is expected to depict a growth of 17% YoY majorly due to resumption in production by LNG players. FatimaFert (FATIMA) and Agritech (AGL) during the said month have cumulatively added 74k tons during Jul 2019 vs. nil in Jul 2018.
• Company wise data suggests, FFC production’s is estimated to be at 215k tons down 2% YoY. However, production from EFERT is expected to be around 173k tons, up 8% YoY.
• Total DAP sales is estimated to clock around 255k tons, down by 25% YoY, taking 7M2019 to 797tons. The largest fall is expected in FFC 50% YoY to 39k tons, followed by EFERT 24% YoY to 42k tons.  
• Industry’s urea closing inventory for the month of Jul 2019 closed at 370k tons, while DAP inventory is expected around 430k tons.
• Key risks to fertilizer sector include, 1) an unfavorable settlement of GIDC, 2) poor crop season due to heavy rains, and 3) further increase in gas prices above our expectations.