National Fertilizer Develop-ment Centre (NFDC) released the fertiliser statistics for August 2012 on Tuesday, and the nutrient off-take situation continues to be grim. The urea off-take for August 2012 is down by a massive 42 percent year-on-year, while the 8MCY12 cumulative urea off-take has shrunk by seven percent year-on-year, and is at a five-year low.
The story on the phosphate fertiliser front is not that rosy either, as farmers bought 31 percent lesser DAP in August 2012, than they did during the same period last year. The cumulative 8MCY12 DAP off-take is also lower by a significant 19 percent, registering another five-year low.
Recall that demist urea price has remained subdued of late due to the presence of imported urea in abundance which the government has offered at subsidised rates. The price of domestic urea price in August stood at Rs 1,700 per bag, having come down from as high as Rs1818 per bag at the start of CY12.
Yet, the farmers have not looked too keen to purchase the nitrogenous fertiliser in bulk as their remains a strong anticipation in the market of a further cut in prices. The government is keen on importing nearly 0.5 million tons urea for the upcoming Rabi season, and the market is abuzz with rumours, that it may be sold at Rs 1,400 per bag.
Market players believe that the local players will be left with no option but to drastically slash the price of domestically produced urea to compete with imports, which is why the farmers are happily playing the waiting game.
Market sources have also revealed that the off-take in September also failed to pick up, for the same reasons plus the prolonged monsoon which has destroyed a few crops, affecting the farmers economy.
It remains to be seen, how the local producers react to this situation as they are already carrying significant inventories at higher cost. What is for certain is that, the listed fertiliser companies won be registering hefty profits seen in yesteryears, come the end of 3QCY12.