Fertilizer prices surge by Rs 50 per bag

According to industry sources, fertilizer prices have increased by Rs 50 per bag to around Rs 1,630 to Rs 1,640 per bag.

The average Dealer transfer Price (DTP) of Urea for manufacturers has been increased to around Rs 1,570 – Rs 1,580 per bag, which was previously trading at about Rs 1,520 per bag.

According to data from the Pakistan Bureau of Statistics, fertilizer prices have been consistently going up since March 2018.

Analysts have not ruled out a further rise in prices due to the constantly low urea inventory levels that have come about as a result of supply side interruption.

In June 2018, lack of sufficient natural gas supply interrupted operations at Agritech Limited (AGL). As a result, urea production fell by 6.5% as compared to the year before. By the end of June, urea inventory plunged to a 39 month low at 190,000 – 200,000 tons.

“Urea inventory levels are expected to clock in at around 200,000 tons, its lowest level since August 2015,” says Syed Khurram Mohiuddin, analyst at BMA Capital. “Urea inventory levels have averaged around 450,000 tons during the past six years in the month of June,” he added.

Saqib Hussain, analyst at Sherman Securities, holds the view that, “considering the fact that local urea prices are 22% lower than international urea prices, local manufacturers have enough room to pass on the cost pressures.”