LAHORE -  The urea offtake for the month of Dec 2017 clocked in at 717,000 tons, down by 20 percent annually, but up 19 percent on a sequential basis due to seasonally higher demand during the month.

Most of the decline on annual basis was led by steep 47 percent drop in Engro Fertilizers Limited's dispatches to 187,000 tons. Other players such as Fatima Fertilizers Limited also recorded a sharp 55 percent reduction in dispatches to 89,000 tons.

On the flip side, Fauji Fertilizer Company (FFC) and Fauji Fertilizer Bin Qasim (FFBL) buckled the trend and managed to increase their urea offtake by 28 percent. On a cumulative basis, urea offtake for CY17 was recorded at 5.89mn tons, up 7 percent YoY. This growth was primarily led by improved farm economics and steep discounts offered (as low as Rs1,200/bag).

A similar trend was witnessed in DAP offtake which contracted marginally 3 percent YoY (-70 percent MoM) and was recorded at 150,000 tons. This is mainly as a result of supply constraints faced by major importers such as EFERT (-29 percent YoY) and FATIMA (Consolidated) (-97 percent YoY). On the flip side, sole DAP producer FFBL managed to increase its sales by 21 percent YoY to 66ktons. On a cumulative basis, DAP offtake during CY17 rose 8 percent YoY to clock in at 2.38mn tons, with a broad based increase in both domestically produced DAP (+8 percent YoY) and imported DAP offtake (+10 percent YoY). Improved farmer economics, announcement of additional cash subsidy by Punjab govt and reduction in average DAP price to Rs2,626/bag from Rs2,856/bag encouraged higher DAP offtake during the year.

Experts said that fertilizer industry closed the year with 336,000 tons inventory, out of which 76,000 tons has already been exported in mid-Jan 2018 to Sri Lanka. They reiterate view of possibility of urea imports in 2HCY18 if demand trend seen in CY17 (up 7 percent YoY) continues in CY18 amid limited supply.

LNG based plants with cumulative installed capacity of 548ktons have been non-operational since Jun 2017 due to unfeasible LNG prices for effective operations.