Eleven percent (YoY) decline in fertilizer off-take

Karachi: According to AKD Securities, latest statistics reveal a decline of 11%YoY in fertilizer off-take (both Urea & DAP) in 5MCY11. In terms of breakup, this is due to an 11%YoY decline in urea off-take to 2.2mn tons and a 10%YoY decline in DAP off-take to 248k tons in 5MCY11.

On a sequential basis, urea off-take is down 3%MoM to 473k tons while DAP off-take is down a hefty 45%M0M to 30k tons. Inline with lower off-take, domestic production of urea registered a decline of 10%YoY to stand at 1.9mn tons in 5MCY11. However, urea production was up an impressive 23%MoM to 444k tons in May’11.

On the pricing front, urea prices continued their uptrend and were up 7%MoM to PkR1, 316/bag in May’11. With sowing of rice and cotton continuing into the current month, AKD Securities expects some improvement in sequential off-take in Jun’11. While the GoP expects a urea shortage in Aug `11, the supply situation should improve with the commencement of Engro’s new urea plant (provided gas supply continues without unexpected delays).

Urea Sales: Inline with the decline in production by 10%YoY (to 1.9mn tons) in 5MCY11, urea off-take registered a decline of 11%YoY to stand at 2.2mn tons in the period under review. Sequentially, the decline in off-take stood at 3%MoM (to 473k tons) in May’11. However, urea prices continued their uptrend and were up 7%MoM to average 1,316/bag in May’11 As per the NFDC report, the GoP expects a urea shortage in Aug’11 Provided the gas supply issue is addressed, supply from the new Engro plant should counter the shortage.

DAP Sales: In 5MCY11, DAP off-take registered a decline of 10%YoY to stand at 248k tons compared with 275k tons sold in the same period last year. On a sequential basis, DAP sales registered a hefty decline of 45%MoM to 30k tons in May’11, although the decline was largely due to a high base effect. Prices of DAP remained flat at PkR4,049/bag in the month under review.

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