Urea supply gets better ... for now

Gas load management continues to haunt local production.

KARACHI:

Urea sales jumped 55% in January on the back of import arrivals, however, local operations continued to remain below par because of gas shortages.

Sales of urea -the highest used fertiliser - increased to 610,000 tons as imports of more than 300,000 tons arrived in January, taking supply ahead of demand. Urea inventory at the end of January stood at 158,000 tons while imports of 480,000 tons are scheduled to arrive during the quarter (January to March 2011).

Reliance on imports may ease the demand of the commodity for now, however, this will have a huge hit as far as the country’s fiscal management is concerned as the fertiliser import bill reached $848 million during the first seven months of the current financial year against a total of $300 million during same period last year. Almost 44% of the demand was met through imports in January.

Overall fertiliser sales were pushed up by urea sales to 26%, however, sales of di-ammonia phosphate which is the second highest used fertiliser, fell by 51%. Urea production went down by 11% to 306,000 tons on a yearly basis where increased gas outages mainly for Sui Northern Gas Pipelines-based plants hurt production.

On a company-wise basis Fauji Fertilizer Company’s urea sales declined by 7% in January against the same period last year.

Engro Fertilizer’s production declined 39% primarily due to lower production from its EnVen plant which is currently shut down due to winter gas load management.

Fauji Fertilizer Bin Qasim Limited (FFBL) suffered from gas issues and was not able to produce a single bag of urea in January. However, FFBL did continue sales of di-ammonia di-ammonia phosphate fertiliser although it plummeted 45%.

Fatima Fertilizer’s CAN production also remained at a standstill in January 2012, whereas the company was only able to sell 3,000 tons of Nitro Phosphate, and carried 56,000 tons inventory to the next month.

Published in The Express Tribune, February 25^th, 2012.