The sales of urea during last month, March, recorded an increase of 40.8 percent as farmers bought more as compared to same period a year ago because of higher water availability in dams and canals.
According to the figures released by National Fertiliser Development Corporation (NFDC), urea demand during March 2004 surged by 40.8 percent to 0.178 million tons as against 0.126 million tons during the corresponding month of last year.
The cumulative off-take for first quarter of 2004 touched 0.852 million tons, 19.3 percent higher compared to 0.716 million tons during the preceding year.
According to NFDC, the attractive prices of cotton and paddy crops, availability of credit, increase in support price of wheat, improvement in water availability and fairly good weather were the main contributing factors.
Tavir Abid, head of research at Jahangir Capital Markets, said that more than half of the urea demand growth reflects the speculative buying and hoarding in anticipation of future price increases.
With the Rabi season now over, fertiliser demand during the next few months is to depict the seasonal slowdown and the impact of the pre-buying in the first quarter.
Cumulative nutrient off-take during Rabi 2003-04 was higher by 11 percent. DAP sales during March 2004 were down by 69 percent. Nevertheless, they represented an approximately 2 percent rise for the overall Rabi season.
Regarding the provincial break-up, March 2004 urea demand in Punjab and Sindh was up by 59 percent and 32 percent, respectively. On the contrary, DAP sales in Punjab and Sindh dipped by 74 percent and 55 percent, respectively.
Domestic fertiliser prices during March 2004 maintained a consolidating trend. According to NFDC, the price of Urea Sona increased by approximately 0.5 percent.
DAP price increased by nearly 3.4 percent to Rs 1,000 per bag level. The increases in prices stem from the significant surge on the international front and the manufacturers' desire to pass on cost increases.
On the international front, fob bulk Yuzhny urea and Middle East bagged urea was respectively quoted in the range of $128-134 per ton to $169-175 per ton. DAP prices in the international market were seen $214-220/ton in the US Gulf and $245-250/ton in the Jordan market.
Tanvir said that the fertiliser sector profitability during 1Q/FY04 is to depict an upbeat picture on the back of higher demand and improved prices and margins. Positive government announcements for the sector are also a possibility in the form of incentives in the Fertiliser Policy 2001.
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