Urea offtake up by 13% in Aug’21, likely to rise in Rabi season

September 29, 2021 (MLN): Urea offtake during August 2021was 649 thousand tonnes, which increased by 13.1 percent over August 2020.

The fertilizer numbers are on an uptrend given the onset of the Rabi season. This takes 8MCY21 urea offtake to 4.1mn MT, up 9%YoY, with an increase in offtake more concentrated in 1HCY21 due to low base effect. The urea price, already up by Rs125/bag FYTD to Rs1,725/bag may sustain over 2HCY21 at least, given supply-side hiccups, as per a report by AKD Securities.

The increase in offtake in 8MCY21 is led by EFERT, which has registered an 18%YoY increase, as opposed to a 3/5%YoY decline witnessed by FFC and FFBL, respectively, the report added.

As per a monthly report issued by National Fertilizer Development Centre (NFDC), Total urea availability during August 2021 was about 837 thousand tonnes, which comprised 321 thousand tonnes of the previous month leftover and 515 thousand tonnes domestic production.  Urea offtake during August 2021 was 649 thousand tonnes, leaving a closing balance of 187 thousand tonnes for September 2021.

Province-wise, urea offtake during August 2021 increased by 6, 52 and 8 percent in Punjab, Sindh and Balochistan, respectively over the same month of last year. Its offtake decreased by 29 percent in KP.

During Kharif 2021 (April-August), urea offtake was 2,771 thousand tonnes, showing a marginal decrease of 0.9 percent.

It is estimated that about 3,372 thousand tonnes of urea would be available during Kharif 2021 which includes 298 thousand tonnes of opening balance and 3,074 thousand tonnes of domestic production. The estimated offtake of urea would be about 3,168 thousand tonnes, leaving a balanced stock of 175 thousand tonnes of urea for the upcoming Rabi 2021-22.

Rabi 2021-22 is expected to open with 175 thousand tonnes of urea. The total availability of urea is expected to be 3,262 thousand tonnes with domestic production of 3,087 thousand tonnes during Rabi 2021-22. The demand for urea during Rabi 2021-22 is projected around 3,195 thousand tonnes leaving a closing stock of 67 thousand tonnes. The availability of urea was estimated on the basis of the ECC decision which allowed the SNGPL urea plants to operate on subsidized LNG up to November 30, 2021.

Unfortunately, these plants were made nonoperational after June 2021 due to a shortage of LNG without intimation to the ECC of the Cabinet. Resultantly, the country will face an acute shortage of urea during December and onward, the NDFC report said.

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