KARACHI, Sept 28: According to the data released by National Fertilizer Development Centre (NFDC), year-to-date (Jan-August) urea off-take stood at 3,320 Kt - 13.84 per cent higher than the corresponding period last year.

Analyst at Arif Habib Securities, Hasnain Imam stated in his report on the sector that the urea off-take during August 2005 showed marginal increase of 0.7 per cent to 452 Kt while DAP off-take during the month jumped by 7 per cent to 114 Kt.

Similarly, year-to-date DAP off-take showed a significant jump of 33.40 per cent to 619 Kt. The average retail prices of urea witnessed a marginal decline of 0.7 per cent to Rs506.7 per bag while the average prices of DAP surged by 2.6 per cent to Rs1,058.10 per bag. “The international prices of DAP also continued to show an upward trend as the average price of ‘Bulk US Gulf’ at the end of the month rose to $263 per ton”, said the analyst, adding: “The continuous increase in prices of DAP bodes well for Fauji Fertilizer Bin Qasim (FFBL) which is the only manufacturer of DAP in the country and fulfils around 35 per cent of the country’s need for DAP”.

The analyst at AHSL observed that based on an aggressive GDP target, agriculture and cotton output for the FY06, the prospects of fertilizer sector looks bright.

In another report on the sector, analyst at First Capital Equities, Shahab Farooq, pointed out that though 2005 was likely to be another remarkable year for the fertilizer sector, the demand supply situation was very tight. The phenomenal growth in urea demand was likely to continue and tight demand supply situation was likely to result in another upward prices revision by the urea manufacturers.

He stated that in the longer run the country desperately needs a new urea plant even after incorporating expansions and Fatima plant. The government has already announced allocation of 100mmcfd of gas for a new urea plant. The analyst observed that apart from a decent increase in domestic urea production considering the capacity constraints, the major driver for improved margins for the sector, would be increasing fertilizer prices. “Average retail prices of urea have surged up by 12 per cent during the period Jan-Aug” the analyst stated.