Karachi, July 27, 2022 (PPI-OT): Pakistan Fertilizer: Urea sales continued its momentum in Jun’22

Urea offtakes for Jun’22 clocked in at 0.73mn MT, against 0.69mn MT in SPLY, depicting an increase of 6.7%YoY. Meagre increase in offtake is possibly due to pre buying of dealers in anticipation of price hike. On MoM, basis, offtakes witnessed an increase of 77%. The increase is mainly attributable to seasonal demand.

Offtakes for DAP clocked in at 145k MT for Jun’22, recording an increase of 113%/54% on YoY/MoM basis. The increase is mainly attributable to muted DAP sales in preceding months.

NP and NPK offtake for Jun’22 clocked in at 36%YoY and 41%YoY, respectively. The reason for higher volumetric sales is possibly due to better product availability and farmers preferences towards other phosphate fertilizers due to sky rocketing DAP prices.

CAN offtake for the month declined by 16%YoY during Jun’22. Similarly, offtakes fell by 18%YoY in 6MCY22.

Industry’s urea inventory stood at 256k MT at the end of June vs 466k MT at the end of May. Similarly, DAP inventory stands at 337k MT at the end of June vs 369k MT last month. FFBL and EFERT hold major chuck of DAP inventory, with 137k MT and 80k MT, respectively. These companies will enjoy inventory gains due to rising DAP prices amid PKR/USD devaluation.

We continue our liking for the sector due to stable dynamics of fertilizer industry, reasonable pass on ability and attractive dividend yield, where EFERT and FFC are our top picks.