JS Securities Limited – JS Research Beep (27-07-2021)

Karachi, July 27, 2021 (PPI-OT): Fertilizers: Urea Offtake decreases by 9% YoY in 2QCY21

As per the latest data released by NFDC, Urea offtake for the 2QCY21 clocked in at 1.5mn tons vs. a higher base of 1.65mn tons in the corresponding period of last year, reporting a decline of 9% YoY. To recall, dealers awaited clarification on subsidy offered on Urea during 2QCY20, which led to delayed offtake falling in the month of Jun-2020. DAP offtake for the quarter clock in at 0.3mn tons vs. 0.4mn tons in SPLY depicting a 26% YoY dip. Much of DAP for the season was bought in the previous quarter as there were expectations of a rise in DAP prices owing to restricted supply globally. The closing inventory for Urea as at June end is 432K tons while ending inventory levels for DAP are 347K tons.

In other news, Urea manufacturers decided to increase prices by Rs50/bag today effective 1st August, 2021. We do not rule out further increase in prices in the coming months. Fertilizer companies are currently selling Urea at a discount of 60% to international prices.

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