June 29, 2012
Pakistan''s January-May 2012 fertiliser sales down 24%
In January-May 2012, Pakistan fertiliser sales have dropped 24% to 2,216,000 tonnes as compared to same period of last calendar year.
The break-up shows that urea off take fell by 20% on year to 1.72 million tonnes but improved by 22% on month to 377,000 tonnes in May 2012 mainly due to PKR145 (US$1.53) per bag price cut to get rid of record inventory available with the industry.
On the other hand, DAP sales declined by 13% on year and 57% on month to 26,000 tonnes with FFBL contribution of 17,000 tonnes. "We believe, the fertiliser off take will gradually improve with relatively reduced availability of imported urea inventory in the country in second half of 2012," said Naveed Tehsin, an analyst at JS Global.
Most importantly, only 50,000 tonnes of urea off take is attributable to the GoP''s National Fertiliser Marketing Limited (NFML) sales, he added. The strategy of local urea manufacturers to reduce price by PKR145 (US$1.53) per bag from May 2012 to get rid of record inventory paid off. Along with that the pre-announced rise in urea price of PKR50 (US$0.53) per bag from June 16, 2012 may also have induced farmers to procure urea at the lower price of PKR1,650 (US$17.42) per bag, he added.
"In our view, Fauji group was the major beneficiary of this strategy as FFC and FFBL were able to record increases of 172% on month and 170% on month to 204,000 tonnes and 52,000 tonnes, respectively," Tehsin added. On year basis, DAP off take fell by 13% to 173,000 tonnes in May 2012, while in May 2012 its sales declined by 13% to 26,000 tonnes.
"We believe the subdued off take numbers to be a temporary phenomenon, as going forward, we may witness a revival of urea demand with the start of Rabi season," he said and added that however, the drastic decline in international urea price along with the regulatory risk related to Competition Commission of Pakistan''s enquiry report remains a key risk.