Karachi, August 26, 2021 (PPI-OT): Pakistan Fertilizer – Jul’21 urea offtake; FFC and FFBL lead the pack

As per the numbers released by NFDC, urea offtake increased 9%YoY, but exhibited a decline of 10%MoM to 621K MT. This takes 7MCY21 urea offtake to 3.5mn MT, up 8%YoY. The overall urea inventory closed at 321K MT down 26%MoM, at par with the levels witnessed during the same period last year. Urea price, already up by c. PkR125/bag FYTD to PkR1,725/bag may sustain over 2HCY21 atleast, given supply side hiccups.

DAP offtake increased 184%MoM but posted a decline of 23%YoY to 193K MT, taking 7MCY21 DAP offtakes to 794K MT, down 6% YoY. FFC led the pack with c. offtake in CY21TD up 65%YoY as opposed to 31/9% decline in EFERT/FFBL DAP offtakes, also being the outperformer in Jul’21. DAP inventory in Jul’21 closed at 400K MT, up 5% YoY, on the onset of seasonally pertinent 2H.

EFERT offers highest D/Y in the sector where CY22/23F D/Y stands at 14.2/14.2% at last close, despite incorporating non-concessionary rates 3QCY21 onwards. For FFBL, strong profitability in 2HCY21 as well as one-time impact of conclusion of sell-off transaction of wind power projects will trigger price performance.