LAHORE - National Fertilizer Development Centre (NFDC) reported urea offtake for the month of June 2018 at 608,000 tonnes, down 43percent YoY.

Consequently, urea inventory at the end of June 2018 stood at 167,000 tonnes (lowest inventory level since Aug 2015) down from 329,000 tonnes in previous month and 335,000 tonnes in Dec 2017.

Amongst domestic players, Fatima Fertilizers Limited (FATIMA) holds highest urea inventory of 117k tons (70percent of total). All major urea manufacturers barring FATIMA (which reported urea sales of 91k tonnes, up 11percent YoY) reported negative growth in urea offtake due to high base set in same period of last year.

On a cumulative basis, 1HCY18 urea offtake stood at 2.73million tonnes as compared to 2.7million tonnes in same period of last year (+1percent YoY). During the period, Fauji Fertilizer Bin Qasim (FFBL) managed to post the largest expansion in offtake of 29percent thanks to higher production made possible through removal of production bottleneck post commissioning of new coal power plant.

DAP offtake during June 2018 was recorded at 190k tonnes, up 70percent YoY. The high growth in DAP offtake is mainly a result of delayed kharif sowing this year which pushed DAP offtake later in the cycle than usual. Fauji Fertilizer Company’s (FFC) DAP offtake outperformed the wider industry with sales recorded at 66k tons (up a massive 4.3x YoY). Cumulative, DAP offtake during 1HCY18 was registered at 682k tons (+16percent YoY).

DAP inventory at the end of Jun’18 stood at 406k tonnes as compared to 296k tonnes in same period of last year.

During 2HCY18, urea offtake growth is likely to witness a slowdown as compared to the 1HCY18 as pre buying by dealers in first half along with higher prices would contain offtake growth. On the other side, higher retention prices (up Rs150/bag in CY18TD) should lead to margin accretion in the second half.