KARACHI, Sept 27: Demand for fertilizer (Urea) declined by 7.7 per cent to 0.396 million tons during August 2003, compared with same period last year, figures released by the National Fertilizer Development Corporation (NFDC) indicated.

Overall, the demand for eight months: Jan-August 2003 had slipped two per cent to 2.703 million tons, compared with 2.754 million tons during the corresponding period of the previous year. DAP offtake during the month was at 35,000 tons, almost 59 per cent lower compared to August 2002.

Analysts commented that the trend of urea sales in Punjab and Sindh portrayed a divergent picture. Offtake in Punjab was marginally up by 1.5 per cent, while sales in Sindh plunged by 31 per cent. “The urea offtake has slowed, as the fertilization of Kharif crops is almost over,” says Tanvir Abid, head of research at Jahangir Siddiqui Capital Markets (Pvt) Limited.

Another fertilizer sector follower commented that information coming from the fields suggested that performance of Kharif crop was good. But the cotton crop was fighting off a pest attack. Urea inventory levels at the end of August stood at 0.371m tons and DAP inventory levels were at 0.219m tons (up 24 per cent month-on-month).

International fertilizer prices maintained firm trend during the period under review. FOB bulk ‘Yuzhny’ urea prices during August 2003 were quoted at $146-151 per ton compared to $137-144 per ton during the previous month. Middle East bagged urea rose to $157-162 per ton. DAP prices were in the range of $180-181 per ton FOB bulk in the US-Gulf and $195-200 per ton FOB in the Jordan market.

Mr Tanvir stated that the outlook for fertilizer demand during the remainder of 2003 portrayed “an extremely sanguine picture” on the back of significant improvement in the country’s water supply and heavy rains. He said that according to the NFDC report, the wheat procurement price, the timing of sugarcane crushing and the size of cotton crop would be the determinants of fertilizer demand during the coming months. At the stock market, the major fertilizer scrips — Fauji Fertilizer and Engro Chemical — were offering dividend yields of 9.4 per cent and 7.6 per cent, respectively, on current prices.