Price ambiguity: Urea offtake to take some hit

Data suggests sales will be lower in September 2015

KARACHI: Despite the government’s announcement regarding the impending subsidy distribution, general sentiment in the market remains ambiguous on the final price of urea.

What is not uncertain is the gradual decline in urea sales. While final figures on urea sale are yet to be released, data revealed by some leading companies depicts that urea sales are going to see a sharp decline in September 2015.

Sherman Securities analyst Saqib Hussain commented on Thursday that the uncertainty over the expected cut in urea prices is forcing farmers to delay buying. “Due to this, urea sales in first quarter (Jul-Sep) of fiscal year 2015-16 are expected to see a sharp decline.”

According to discussions with the fertiliser makers, urea sales during the month of September 2015 are likely to remain at 210,000 tons compared to 428,000 tons in August 2015, down 51% month-on-month, Hussain added.

“We cannot comment on the urea prices right now because we are still in negotiations with the government,” said a top official of a leading fertiliser company.

The decline in sales is likely due to two broad reasons, first because of the expected decline in urea prices and secondly because of Eid holidays.

Company wise data shows that sales of Engro Fertilizer during September 2015 are expected to decline by 44% month on month to 65,000 tons, while sales of Fauji Fertilizer Company (FFC) to reduce by 74% month on month to approximately 50,000 tons.

However, despite slow sales in the first quarter (Jul-Sep) 2015-16, Hussain expects fertiliser sales will rebound in October because some companies have already agreed to reduce their prices.

Published in The Express Tribune, October 9^th, 2015.

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