Urea sales plunge 37% in April

Availability of subsidised imported urea dents local producers’ margins.

Our Correspondent May 29, 2012

KARACHI: Total urea off-take in Pakistan has declined significantly by 37% to 308,000 tons in the month of April 2012, according to official figures released by the National Fertilizer Development Centre, says a Topline Securities research note.

Breakup of urea sales – the most widely used fertiliser – shows that local manufacturers sold only 151,000 tons, while sales of imported urea stood at 157,000 tons compared to 404,000 tons and 82,000 tons last year.

Company-wise data shows that urea sales of Engro, Fauji Fertilizer Company, Fauji Fertilizer Bin Qasim and Fatima Fertilizer stood at 30,000 tons, 75,000 tons, 19,000 tons and 1,000 tons respectively. Sales of locally produced branded urea during January-April 2012 were recorded at 644,000 tons, down 57% compared to last year.

The lower off-take could be due to a reduced demand amid delays in Kharif sowing due to unavailability of seeds; and also due to lower smuggling to border countries (especially Afghanistan) due to sharp increases in local fertiliser prices amid gas curtailment, cess and sales tax, which have reduced the price benefit of smuggling, says the note.

The decline in local branded urea sales is also strongly attributable to the availability of imported urea in the market at subsidised rates.

The government’s reliance on imports has eased demand of the commodity for now: however, the move will hit the country’s fiscal management efforts, 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 the same period last year.

On the DAP front, total sales in April stood 10% higher than last year at 60,000 tons, while cumulative sales during January-April 2012 stood at 147,000 tons, down 32% year-on-year.

Published in The Express Tribune, May 29th, 2012.


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