DAP sales drop due to price hike

Offtake of other kinds of fertiliser surges


Usman Hanif December 28, 2021
FILE

KARACHI:

The sales of di-ammonium phosphate (DAP) fertiliser, an important nutrient for agricultural land, recorded a sharp decline in November 2021 on account of inflated prices.

According to the monthly data released by the National Fertiliser Development Centre (NFDC) on Monday, DAP offtake fell 40% year-on-year and 36% month-on-month in November on account of higher prices at the end of Rabi season.

During January to November 2021, DAP offtake stood at around 1.76 million tons against 1.96 million tons in the same period of last year, he added.

The decline in offtake is attributable to the significant rise in DAP rates.

To note, DAP price in November 2021 soared to Rs8,015 per bag against Rs3,985 per bag in the same month last year, showing an increase of 101%.

On a monthly basis, the price jumped 16% amid increase in international prices and rupee devaluation.

“The drop in DAP sales came on the back of sharp hike in its price,” said Insight Securities analyst Muhammad Shahroz while speaking to The Express Tribune. “Furthermore, demand of nitrogen phosphorus (NP), nitrogen phosphorus potassium (NPPK) and calcium ammonium nitrate (CAN) fertilisers witnessed an increase during the month compared to the same period of last year.”

However on a monthly basis, all three products recorded a decline, the data revealed.

The sales of NP fertiliser climbed 17% year-on-year from January to November 2021, he said. Furthermore, significant rise in DAP prices also enhanced sales of NP.

Read Fertiliser being sold to farmers at premium

Currently, the price ratio of NP and DAP equals to around 67% while the three-year average amounts to 77%. However, the absolute difference between prices of DAP and NP amounts to around Rs2,600 per bag.

The demand of CAN remained robust in first 11 months of 2021 and clocked in at around 831,000 tons. The sales of CAN fertiliser were recorded at 579,000 tons in the same period of last year.

On the other hand, the sales of urea ticked up by 8% year-on-year and 12% month-on-month to 574,000 tons in November.

During November 2021, total urea production stood at around 532,000 tons against nearly 515,000 tons in the same period of last year, showing a meagre increase of around 3% on a year-on-year basis.

The cumulative sales during January-November 2021 stood at 5.74 million tons as opposed to s5.15 million tons in the same period of last year, showed the report. The increase in urea demand is attributable to improved agronomics and lofty buying from dealers.

“Currently, the availability of urea is a major concern in retail markets as it is being sold at a hefty premium despite smooth operations of fertiliser manufactures,” Shahroz said.

Executive Director Fertiliser Manufacturers of Pakistan Advisory Council Sher Shah Malik told The Express Tribune that urea sales increased 15% from September 2021 onward while DAP offtake witnessed a contraction of 4%.

Published in The Express Tribune, December 28th, 2021.

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