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Pakistan Fertilizer: Urea sales likely to decline by 56% YoY in May-2020

• Pakistan Urea sales in May-2020 are expected to fall by 56% YoY to clock in at 258k tons as dealers and farmers held back their purchases for the materialization of subsidy announced by the government. 
• Recall that ECC had approved a package of Rs50bn for the agriculture sector on May 13, 2020, which includes a subsidy of Rs37bn to farmers on fertilizers in the form of Rs925/bag on DAP and Rs243/bag on Urea.
• Amongst the companies, Fauji Fertilizer Bin Qsim (FFBL) is expected to post the highest decline in Urea sales of 76% YoY to 19k tons during May-2020. Fauji Fertilizer (FFC) and Engro Fertilizer (EFERT) are likely to post declines in their Urea offtakes of 58% YoY and 31% YoY, respectively.
• Urea production in May-2020 is likely to decline by 4% YoY at 506k tons due to the absence of LNG-based players. This takes Urea closing inventory to around 1,108k tons.
• During 5M2020, Urea sales are expected to clock in at 1,525k tons compared to 2,245k tons in 5M2019, down 32% YoY - affected by COVID-19 and lockdowns also.
• Total DAP sales are likely at 56k tons, down by 74% YoY for the same reasons.
• During 5M2020, DAP sales are likely to decline by 14% YoY to 417k compared to 488k tons.
• Company wise data suggests, FFBL and EFERT are anticipated to record sales of 23k tons and 10k tons, respectively, followed by FFC sales of 7k tons during May-2020. 

FFBL’s DAP production is expected at 75k tons, taking closing inventory of DAP to around 530k tons.