Urea offtake jumps 76pc to 1.2m tonnes in June

KARACHI: The provisional offtake of urea registered a whopping increase of approximately 76pc YoY to 610,000 tonnes in June 2020, as compared to the same month of last year. 

“Provisional fertiliser offtake for June 2020 indicates that urea sales witnessed a massive surge owing to seasonality factor along with reopening of the economy during the month,” explained Tahir Abbas, Head of Research at Arif Habib Limited.

Inventory levels dropped to 400,000 tonnes in June 2020 as compared to 1.1 million tonnes in May 2020.

“In light of strong demand in the upcoming Rabi season, and with an estimated urea offtake at 6 million tonnes in 2020, we view production (excluding two RLNG-based fertiliser manufacturers) to arrive at 5.5 million tonnes,” Abbas stated.

Last year, the government had operated two RLNG fertiliser plants to plug the shortfall of urea. Subsequently, the country’s urea production had clocked in at 6.2 million tonnes, the highest ever in its history.

However, for the future, Abbas said, “The government should operate both fertiliser plants for the remaining months of CY20 in order to bridge the expected shortfall of 0.5 million tonnes of urea in 2020. This will not only help the government save forex reserves but will also ensure efficient distribution of urea and maintenance of adequate buffer stock in the country.”

The Fauji Group’s (FFC and FFBL) urea offtake experienced a rise of 83pc YoY to 1,175,000 tonnes in June (390pc MoM). The group managed to outperform its peers with 8pc YoY growth in urea offtake during the first half of 2020.

Similarly, Engro Fertilizers Limited’s urea offtake underwent a growth of 187pc YoY and 391pc MoM to 504,000 tonnes in June, whereas Fatima Fertilizer Company Limited’s sales surged 16pc MoM to 52,000 tonnes albeit, witnessed a downturn of 43pc YoY.

However, no offtake was recorded under National Fertilizer Marketing Limited (NFML).

Meanwhile, the sale of DAP declined 28pc YoY, while remaining strong on a MoM basis (+88pc) to 115,000 tonnes in June.

During the first half of 2020, DAP sales declined 17pc YoY to 538,000 tonnes. On the other hand, its inventory position clocked in at 466,000 tonnes during the same period.