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Workers are packing urea fertiliser bags at a manufacturing plant in this file photo.
Workers are packing urea fertiliser bags at a manufacturing plant in this file photo.

KARACHI: Fertiliser manufacturers have raised urea price by another Rs50 to Rs1,650-1,670 per 50kg bag due to declining urea inventory.

This is the second hike during the current month taking cumulative increase to Rs100 per bag.

So far in the calendar year 2018 urea price at retail level has increased by Rs250/bag while retention price of urea manufacturers increased by Rs270-280/bag as earlier they were giving discounts, Saqib Hussain of Sherman Securities said.

Considering the fact that local prices are 22 per cent lower than international urea prices, manufacturers have enough room to pass on cost pressures, he added.

According to Syed Khurram Mohiuddin of BMA Capital Management domestic producers have increased urea prices by Rs50/bag to Rs1,571/bag which is third increase in prices since the beginning of CY18 taking total increase in market price to 15pc (Rs200/bag).

Devaluation and emerging supply deficit scenario have driven the recent price rise. Urea inventory levels are expected to clock in at the lowest level of 200,000 tonnes since August 2015. Urea inventory levels have averaged 450,000 tonnes during the past six years in the month of June.

Despite the recent price increase, domestic urea prices are currently trading at a discount of 29pc to international urea prices as free fall of the rupee against the greenback nullified impact of price hike, Khurram said.

Published in Dawn, July 18th, 2018