Karachi, December 03, 2021 (PPI-OT): Fertilizers: Urea Offtake likely to increase by 4% YoY in Nov-2021

As per provisional data, Urea sales in Nov-2021 are expected to clock in at 557k tons, up 4% YoY. For the month of Nov-2021, Fauji Fertilizer (FFC) is expected to post Urea sales volume of 219k tons followed by Engro Fertilizer Ltd (EFERT)’s estimated off-take of 193k tons while Fauji Fertilizer Bin Qasim’s (FFBL) off-take is expected at 43k tons. Cumulative off-take for 11MCY21 is anticipated to total to 5.7mn tons as compared to 5.2mn tons in the SPLY, reflecting a 11% YoY increment. Urea production on the other hand is expected to register at ~506k tons for the latest month which will take urea’s closing inventory for Nov-2021 to ~89k tons.

DAP offtake for November is likely to clock in at 0.2mn tons vs. 0.4mn tons in SPLY depicting a 41% YoY dip. This is likely due to shortage of DAP in the local market and higher prices owing to restricted supply globally.

DAP prices in the local market increased by ~Rs700/bag in Nov-2021 and DAP primary margins now stand at a decent level of ~US$265/ton. Urea price on the other hand has been the same since Aug-2021 when it had last been increased by Rs50/bag in the local market. We do not rule out an increase in Urea prices in the coming months, Fertilizer companies are currently selling Urea at a discount of 80% to international prices.