KARACHI: The country’s urea offtake plunged 12 per cent year-on-year to 406,000 tonnes in February. However, the total urea sales jumped 46pc to 1.06 million tonnes year-on-year in 2MCY21.

Noor Huda Shaikh, research analyst at BMA Capital, said the DAP volumes remained flat during February as its sales remained largely unchanged at 88,000 tonnes mainly due to an uptrend in prices on account of supply disruptions in the global market.

Since January, international DAP prices have risen by 35pc to $575 per tonne currently, whereas local prices have soared by 26pc to hover near Rs5,500 per bag.

Urea prices declined by over Rs200 per bag in the same period last year after the elimination of GIDC, which pushed urea sales to 0.46m tonnes in February 2020. On a sequential basis, the volumes contracted by 37pc in February owing to a seasonal shift.

Records 46pc jump in 2MCY21

On the contrary, both urea and DAP offtake improved by 46pc and 30pc year-on-year to 1.06m tonnes and 0.17m tonnes during 2MCY21 mainly on the back of improving farm economics and favorable government support policies, Mr Shaikh said.

He said urea inventory clocked in at 0.13m tonnes in February which is considerably lower than 0.39m tonnes recorded in the same month last year.

Despite the resumption of RLNG-based plants in the ongoing month, the analyst estimated that the industry inventory level would remain low near 0.35m tonnes by the end of December 2021. This would keep the pricing power of fertiliser players high, and any potential increase in costs, including the rise in gas tariff, may be passed on to end consumers.

On the DAP side, he expected that the prices would remain bullish ahead of kharif season, till 1HCY21, after which they would ease to their normal levels.

Published in Dawn, March 25th, 2021

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