Urea, DAP sales plunge 29% in Aug as monsoon hits

September 16, 2024 (MLN): Fertilizer sales, including urea and DAP, plunged 29% compared to last year amid weak agronomic conditions coupled with higher monsoon rains during August 2024, according to monthly report issued by the National Fertilizer Development Company (NDFC).

The sales fell to 648,000 tonnes compared to 913,000 tonnes in the same month of last year.

Urea offtake fell 14% to 559,000 tonnes as against 650,000 tonnes in August 2023.

While DAP sales decreased 66.2% to 89,000 tonnes compared to a sale of 263,000 tonnes in the same month of last year.

Cumulative urea offtake from April to August was 2,381,000 tonnes against projected demand of 2,967,000 tonnes i.e. 19.7% less.

The decline in offtake may be attributed to late sowing of Kharif crops as a result of climate change, economic recession due to low wheat prices and significant reduction in cotton acreage in Punjab (20%) and Sindh (12%), the report noted.

Total availability of urea is estimated at 3,369,000 tonnes with domestic production of 3,195,000 tonnes and 174,000 tonnes of carryover stock.

Urea offtake estimates for Kharif 2024 are 2,906,000 tonnes with closing balance around 439,000 tonnes.

Expected availability of DAP during Kharif 2024 is around 1,050,000 tonnes, comprising 78,000 tonnes opening stock, 533,000 tonnes imported supplies and 439,000 tonnes domestic production, the report noted.

DAP demand is estimated around 682,000 tonnes. A handsome volume of imported supplies of DAP (241,000 tonnes) in September, 2024 will keep its supplies smooth in the market during upcoming Rabi 2024-25.

Supply/Demand Situation

Total urea availability during August 2024 was 972,000 tonnes, which comprised 399,000 tonnes of previous month leftover and 572,000 tonnes domestic production.

Urea offtake during August 2024 was 559,000 tonnes, leaving a closing balance of 406,000 tonnes.

Total availability of DAP during August 2024 was 321,000 tonnes, which included 103,000 tonnes stock of previous month, 142,000 tonnes of imported supplies and 76,000 tonnes domestic production.

Its offtake was 89,000 tonnes leaving closing balance of 232,000 tonnes.

Domestic prices

Price of urea (sona) and urea (other) decreased slightly by 0.6 and 0.8%, respectively.

Prices of phosphate fertilizer products i.e., SSP, DAP and NP increased by 4.9, 3.9 and 2.2%, respectively.

The average price of urea (sona), urea (other) and DAP was Rs4,742, Rs4,602 and Rs11,798 per 50 kg bag, respectively

International prices

Price of urea in China market and Arabian Gulf decreased by $15 per tonne during August 2024 compared with previous month.

Urea prices were quoted as $290-308 and $335-355 per tonne FOB bulk for China and Arabian Gulf, respectively.

Rising trend in DAP prices was observed during August 2024 with increase of $25 per tonne.

DAP prices were in the range of $580-656 per tonne FOB bulk in Australia and $590-610 per tonne FOB in China.

MAP and TSP bulk prices were $580-610 and $495-530 per tonne FOB, respectively.

Ex-Karachi price of imported urea ranged between Rs5,524 and 6,545 per 50 kg bag, while price of imported DAP (China) was in the range of Rs10,666 to 10,994 per 50 kg bag.

Nutrient Offtake

Total nutrient offtake during August 2024 was 346,000 tonnes, which decreased by 44.6% over August 2023.

Nitrogen, phosphate and potash offtake decreased by 32.1, 72.7 and 60.5%, respectively.

Decrease in offtake is mainly due to prolong spell of monsoon/ subsequent rainfall and low commodity prices.

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