Pakistan Urea Sale likely to be down 16% in August 2022

Pakistan Urea sale in Aug-2022 is likely to clock in at 543,000 tons, down 16% YoY primarily due to heavy rainfall across the country.

However, the sale is likely to be up 17% month on a monthly basis (MoM) due to seasonal impact.

Urea sales in the first eight months of 2022 are likely to clock in at 4,253,000 tons compared to 4,169,000 tons in 8M2021, up 2% YoY.

This is likely to take the closing inventory of Urea to around 205,000 tons in Aug-2022 compared to 187,000 tons in Aug-2021.

Amongst the companies, Fauji Fertilizer Company (FFC) and Engro Fertilizer (EFERT) are likely to record offtake of 175,000 tons each in Aug-2022 followed by Fatima Group of 105,000 tons, and Fauji Fertilizers Bin Qasim (FFBL) of 44,000 tons.

DAP Sales

Total DAP sales during Aug-2022 are likely to clock in at around 23,000 tons, down 88% YoY and 66% MoM primarily due to above mentioned reason. This takes 8M2022 DAP sales to 673,000tons, down 31% YoY.

Company-wise data suggests, that FFBL and EFERT are likely to record sales of 12,000 tons and 9,000 tons respectively, followed by FFC’s sales of 1,000 tons.

FFBL’s DAP production is likely to be at around 75,000 tons, taking the closing inventory of DAP to around 430,000 tons. The higher price of DAP has also been one reason that led to dropping in Pakistan Urea sales.

Considering heavy rains resulting in flash floods, we expect Urea sales to be down by 3-5% year on year (YoY) basis in 2022 to around 6.0-6.1 million tons from 6.3 million tons in 2021.

On other hand, we expect DAP sales to down by 30-35% to around 1.2-1.3 million tons in 2022 from 1.8 million tons in 2021.

We continue to have an ‘Overweight’ stance on the Fertilizer sector with EFERT and FFC as our preferred picks due to high dividend yield and ability to pass any cost pressures, Topline Pakistan Research said in a report.