Agri Forum Pakistan (AFP) has alleged that the government is intentionally delaying import of urea to give fertiliser companies an undue advantage owing to product shortfall in the market.
This has been stated by Chairman Agri Forum Pakistan Ibrahim Mughal on Monday. Mughal said that the Economic Coordination Committee (ECC) has directed Trading Corporation of Pakistan (TCP) to import 300,000 tonnes of Urea before July this year but till now TCP has imported only 50,000 tonnes, contributing to a shortfall of 250,000 tonnes in the market. Mughal explained that urea is being used by farmers before the rainy season and as the monsoon season is passing away, farmers have been compelled to buy locally manufactured urea at high rates for timely usage in crops.
He said the import of urea after monsoon will be of no use for farmers and thus will affect TCP with massive losses. He said that during the month of July, fertiliser companies have earned over Rs100 billion due to high price of urea in the market. Mughal also hinted at a direct negative impact on growth of crops due to a decline in the use of urea by farmers. On other contrary, Industry sources said that producers have increased the price of the commodity’s to dilute the impact of a rise in gas tariffs and pass the burden on to the consumers. Gas load shedding to fertiliser manufacturing units has also disturbed the production of urea.
He said the import of urea after monsoon will be of no use for farmers and thus will affect TCP with massive losses. He said that during the month of July, fertiliser companies have earned over Rs100 billion due to high price of urea in the market. Mughal also hinted at a direct negative impact on growth of crops due to a decline in the use of urea by farmers. On other contrary, Industry sources said that producers have increased the price of the commodity’s to dilute the impact of a rise in gas tariffs and pass the burden on to the consumers. Gas load shedding to fertiliser manufacturing units has also disturbed the production of urea.
Data released by National Fertiliser Development Company (NFDC) stated that lower urea sales were due to lower production (gas shortage) and delay in imports. Thus urea sales dropped by 12 per cent to 2.7million tonnes during first half of 2011, whereas production of urea and imports declined by 7 per cent and 60 per cent respectively. Moreover, DAP sales declined by 4 per cent to 0.31million tonnes despite the fact that DAP prices increased by more than 50 per cent over the same period last year. According to NFDC zero imports of urea in June 2011 and low inventory levels led to an increase in urea price by Rs79-88 per bag in June. According to TCP, import of Urea is being made in compliance with the decision of the ECC and the Cabinet to meet urgent requirement of farmers for rabi crop. To date, out of 300,000 tonnes, TCP has lined-up prompt import of 150,000M/T urea. Out of this 100,000 M/T has been procured through open tender whereas 50,000 M/T is being imported from M/s. Saudi Basic Industries Corporation (SABIC) under the Saudi Fund for development of credit facility.
Urea: Urea off-take rose to 492K tonnes in June 2011 versus 473k tonnes in May 2011. Across major manufacturers, MoM off-take saw a mixed trend: FFC (205k tonnes vs. 210k tonnes), Engro (120k tonnes vs. 113k tonnes), FFBL (49k tonnes vs. 44k tonnes), and FATIMA (38k tonnes vs. 41k tonnes). On a YoY basis, Urea off-take has declined by 11.8 per cent in 6MCY11 compared to the same period last year. Urea retail prices stood at Rs1,407/bag versus Rs1,328/bag in the previous month. Urea production came in at 473k tons which was 6.3 per cent higher than the previous month’s total of 445k tonnes.
DAP: May off-take stood at 68k tonnes versus 30k tonnes in the previous month. FFBL’s off-take improved to 49k tonnes from 22k tonnes in May 2011. The month also witnessed Engro’s off-take improve from 8k tons to 24k tons. The off-take improvement from the previous month was based on higher dealer stocking in anticipation of rising international DAP prices. On a YoY basis, the 6MCY11 off-take is 3.8 per cent below the previous year level. FFBL’s production saw a slight decline (65k tonnes versus 68k tonnes).
