Sindh floods to inflate urea price


The prices of urea are likely to go up during the coming months due to flood situation in the Sindh province, analysts have warned. The natural calamity is also expected to affect the volume of total fertiliser off-take in the agrarian country during the month of September, the analyst viewed.
According to National Fertiliser Development Center (NFDC) latest figures, the fertiliser off-take in the country increased by 3 per cent to 5.1 million tonnes during eight months of this calendar year, January-August 2011.
The analysts said major reason for increased sales despite lower urea sales was the higher selling of DAP that witnessed an increase of 23 per cent to 0.5 million tonnes.
“The improved sales of other nitrous and phosphate like CAN, NP and NPK that saw an increase of 34 per cent to 0.9 million tonnes was another reason for the rise,” they added. Sales of urea, which contributes 73 per cent of total fertiliser off-take, declined by 4 per cent to 3.7 million tonnes during the period under review primarily due to unavailability amid lower production, which downed by 4 per cent, and delay in imports that declined by 60 per cent.
“Only in the month of August, total fertiliser off-take stood at 767k tonnes, up 84 per cent YoY (urea sales up 84 per cent, DAP up 53 per cent),” the analysts said. “The major reason behind higher YoY growth in sales during August is the low base affect as the country faced one of the worst floods in the history of Pakistan last year,” viewed Farhan Mahmood at Topline Research. While on MoM, he said, the total off-take remained almost flat. A company-wise data shows that the urea sales by FFC and Engro posted an increase of 3 per cent and 39 per cent respectively during January-August 2011. “Increase in latter is primarily due to production from its new plant,” said Mahmood. Similarly, he said, the FFBL’s flagship DAP sales stood higher by an impressive 80 per cent primarily due to delay in DAP imports (down 41 per cent). However the FFBL’s urea sales declined by 13 per cent primarily due to lower production amid gas shortage. “On the price front, we believe urea prices which increased by 12 per cent MoM at retail level during August might increase in October as Rabi season is round the corner. However, floods in Sindh might affect total urea off-take in September but will not hamper local manufacturers sales,” the analyst said.