DAP prices surge to Rs16,000/bag
Prices of di-ammonium phosphate (DAP) have soared to around Rs16,000 per bag following recent shipments booked by Pakistani companies at $950 per ton.
Since the breakout of the US-Iran conflict, international DAP prices have surged 18%, reflecting a sharp escalation in global fertiliser costs, says a JS Global report.
Near-term supply to Pakistan is expected to improve on arrival of imported fertiliser in June 2026, including a cargo from Saudi Arabia, along with higher gas allocation to Fauji Fertiliser Company (FFC) to support local production, though stability remains dependent on timely inflows and uninterrupted gas supply.
"Enforcement of company-fixed MRP (maximum retail price) is supporting availability for Kharif, however, elevated DAP prices are likely to drive substitution to cheaper phosphate alternatives and lower application rates. It poses a risk to nutrient balance and crop yields, with market direction remaining sensitive to policy action and farmer affordability," said the report prepared by Muhammad Waqas Ghani. "We believe FFC appears relatively better positioned, supported by a strong local production base and more stable inventory profile."
International DAP prices have surged to $840 per ton, up 18% from $710 per ton since the onset of the US-Iran conflict, lifting global fertiliser costs and pushing local DAP prices in the retail market to around Rs16,000 per bag amid limited imports and cautious market sentiment.
According to the report, domestic inventories stood at 203k tons heading into May, reflecting a modest drawdown amid the absence of April imports and stable local production. However, demand has weakened after a strong first quarter, with April offtake declining sharply due to seasonal slowdown and affordability pressures. Industry channels suggest suppliers are releasing limited DAP volumes.
Industry checks further indicate that dealers may be holding inventory in anticipation of further price upside as market expectations increasingly point toward DAP reaching around Rs17,000/bag over continued firmness in global prices.
Near-term supply visibility is expected to improve with import arrivals in June, helping stabilise domestic availability after recent disruptions driven by geopolitical tensions along key shipping routes. A DAP cargo from Saudi Arabia is due in the near term, which will provide additional supply support.
On the domestic side, the government's 24% increase in gas allocation to FFC is likely to sustain higher production levels and partially offset import dependence through improved local output. However, the effectiveness of these measures would rely on the continuity of gas supply and timely import inflows, as any disruption could tighten inventories and lead to price firmness in the local market, said the report.
As the Kharif sowing season progresses, the government has intensified enforcement of company-fixed MRP to ensure fertiliser availability and curb excessive pricing. But trading activity has slowed since DAP crossed Rs15,000/bag ex-Karachi, with elevated prices pressuring farmer affordability.
"This is likely to encourage lower phosphate application and greater substitution toward cheaper alternatives, potentially resulting in meaningful DAP demand destruction during 2026," said Ghani.
Reduced nutrient application could also weaken soil nutrient balance and adversely impact crop yields over the season, which will increase broader food security risks. "Overall, the near-term market direction is expected to remain sensitive to policy enforcement, global price trends and farmer purchasing power," he said.