LAHORE: Pakistan started February with the lowest urea inventory in the last eight years — a mere 37,000 tonnes of stocks — despite the fact that January consumption was eight per cent down, a research organisation claimed.
However, talking to Dawn, other market watchers believe that even 37,000 tonnes was an optimistic figure, which was ‘reached at with questionable calculations’. The inventory, in fact, has been zero since October when the urea crisis started, they claimed, adding that each bag of urea produced was immediately thrown into the market, which left nothing to build up stocks.
According to JS Global, January registered sales of 599,000 tonnes urea against a production of 565,000 tonnes. With the starting inventory of 71,000 tonnes in January, February is left with 37,000 tonnes only.
“The industry has three figures when it comes to supply chain and they all can differ and [be] used for (mis)calculations. There are production figures, then there are the offtake figures and finally actual consumption,” explained one of the employees of a big manufacturer. “We believe that the above calculations are made on provisional figures, which have painted positive picture then the reality. For the last five months, the industry is immediately sending out what it is being manufactured, motoring it to market instantly. For these months, the industry has not been able to build up stocks as neither capacity went up nor demand slowed down. That is why the market remained volatile and price fluctuated wildly. Things would only improve when 50,000 tonnes urea imports, already tendered, start trickling in, giving some breathing space to the market and farmers,” he said.
According to the JS Global, the sale of diammonium phosphate (DAP) is expected to go up by 42pc in January to 11,7000 as compared to 82,000 tonnes last January.
“This is despite massive price increase. The price of DAP has increased by more than 150pc from Rs4,500 per bag last year to Rs12,000 this year. It is heartening to see sales going up despite price as it would greatly add to the wheat yield,” said Muhammad Ramzan, a DAP dealer from Lahore said.
“However, the government needs to concentrate on urea imports and do so quickly because it is turning out to be poor man’s fertiliser given the market volatility. First, government promised import of 150,000 tonnes of urea when crisis hit a peak. Then it reduced it to 100,000 tonnes and has actually tendered for 50,000 tonnes. Even this 50,000 tonnes should help market if comes in quickly. The February-March window — when demand goes down because of agronomical cycle — can be used to build stocks and improve opening inventory for the kharif season. Otherwise, the current crisis would spill into the next one as well and impact would be even worse,” he warned.
Published in Dawn, February 6th, 2022