KARACHI – The increased gas curtailment to 20 percent and 12 percent from the Sui and Mari gas networks respectively is expected to lead to the supply falling below the expected demand of six million tonnes in 2011.
This is will likely force the government to import more urea and earlier than anticipated. Moreover, the recent price hike of Rs190 per bag of urea is more than enough to offset any production losses.
Despite gas curtailment since April 2010, urea offtake in November 2010 declined by a mere one percent annually to 5.6 million tonnes. However in monthly terms, sale volumes witnessed an impressive turnaround to register a growth of 106 percent to 879,000 tonnes in the month.
Amongst the major fertiliser companies, FFC’s offtake ballooned to 126 percent in November with cumulative sales for the two months (October-November) so far registering at 598,000 tonnes, already surpassing total urea offtake for FFC in the third quarter.
Engro’s urea offtake too rose by an impressive 76 percent compared to last year in November, while the same declined by 5 percent in annual terms for FFBL. National Fertiliser Development Centre’s latest reported fertilizer offtake statistics show total fertiliser sales rising by 38 percent year on year to 1.2 million tonnes in November mainly owing to a phenomenal annual growth of 76 percent in urea sales. DAP sales on the other hand, declined by 36 percent to 180,000 tonnes.
In November 2010, total fertiliser sales registered an annual decline of two percent to 7.8 million tonnes with DAP and urea sales both registering a yearly fall by 19 percent and one percent, respectively.
DAP offtake during November remained low, as it shrunk by 19 percent in annual terms to 1.2 million tonnes. A major factor behind the decline has been the high DAP prices throughout 2010 (average DAP prices are up 23 percent in annual terms). In November alone, offtake fell by 36 percent annually and 52 percent monthly to 180,000 tonnes.
The monthly decline is largely attributed to pre-buying witnessed in October on price raise fears. Looking ahead, it is believed that the offtake to slow down further as fertilizer manufacturers have raised their prices again by Rs100 per bag during December, said Bilal Qamar at JS.
The company wise breakup shows FFBL’s sales exhibited growth of 41 percent annually to 71,000 tonnes, while that of Engro’s declined by 50 percent to 32,000 tonnes during November.
