Karachi, The Pakistani fertilizer sector is anticipated to witness a slight decrease in urea sales for January 2024, with projections indicating a 3% year-on-year drop to 613,000 tons. As per a report from JS Research, the decrease in urea sales is complemented by a significant decline in Di-Ammonium Phosphate (DAP) offtake, which is expected to fall by 27% year-on-year and 49% month-on-month to approximately 70,000 tons. This downturn is attributed to a slowdown in offtake compared to the same period last year and a reduction in pre-buying activities observed in the preceding months.
According to JS Research, provides a detailed analysis of the performance of key players in the fertilizer industry. Engro Fertilizer (EFERT) is projected to report urea sales volumes of 210,000 tons for January 2024, marking a slight decrease of 2% year-on-year but remaining steady month-on-month. Conversely, Fauji Fertilizer Company (FFC) is expected to see an increase in urea sales, with volumes reaching 240,000 tons, representing an 11% year-on-year and 5% month-on-month growth. This growth for FFC highlights a positive trend amidst the overall sector's slight decline in sales.
Despite the anticipated drop in urea and DAP sales volumes for January, JS Research maintains an Overweight stance on the fertilizer sector. The report underscores the sector's stable revenue and cash flow streams as key factors supporting this positive outlook. Additionally, recent clarity on gas pricing for Mari-based fertilizer companies has addressed urea pricing anomalies, ensuring a more level playing field among market players. The research emphasizes the importance of implementing a weighted average rate of gas to avoid price discrepancies and promote fair competition within the sector.
This analysis reflects the dynamic nature of the fertilizer market in Pakistan, highlighting the impact of policy decisions on pricing and market performance. As the sector navigates through these challenges, the focus on equitable gas pricing mechanisms is expected to bolster the industry's stability and growth prospects in the long term.