Taking cue from global market, DAP prices jump

Covid-19 disruptions trigger shortage of commodity in world market

Owing to a jump in international price of di-ammonium phosphate (DAP) fertiliser arising from shortage of the commodity amid Covid-19 disruptions, the local price of DAP has increased as well.

“As per our channel checks, Engro Fertilisers has increased DAP prices by Rs400 to Rs4,350 per bag with effect from January 7, 2021 due to a rise in international price of the commodity,” said Topline Securities’ analyst Sunny Kumar in a research report.

The international price of DAP had increased by $35 to $390 per ton in the last two months, Kumar said. “So far, Fauji Fertiliser and Fauji Fertiliser Bin Qasim have not increased their prices but we believe these companies will follow suit.” Rising cost of phosphoric acid coupled with a persistent increase in DAP prices in the global market lifted local prices of urea, said Arif Habib Limited Head of Research Tahir Abbas.

According to him, Engro Fertilisers increased prices solely due to higher imported DAP prices.“The international price of DAP has indeed soared,” said Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) Executive Director Sher Shah Malik in comments to The Express Tribune.

When asked about the hike by the local fertiliser company, he was of the view that other companies might raise prices as well due to the same reason.

Although the international price had gone up by $30-35 per ton, sales during January and February every year remained very low, said Dawood Hercules Corporation Research Lead Karim Punjani.

Demand for DAP fertiliser in Pakistan stood at around 2.5 million tons annually, out of which 650,000 tons were produced by Fauji Fertiliser Bin Qasim, said Insight Securities analyst Muhammad Shahroz. “The remaining quantity is imported by other companies to meet local demand.”

In January, February and March, the utilisation of DAP decreases due to seasonal impact, Shahroz said. He added that DAP demand always picks up in October, November and December.

Published in The Express Tribune, January 8^th, 2021.

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