Urea off-take for the Kharif season ended September slid by around 5 percent year-on-year. That for DAP went down steeper, at 9 percent year-on-year. It could well be the floods impact in the latter half of the month, but experts BR Research talked to, believe it is too early for the floods to have impacted the off-take.
Bear in mind, urea prices have remained flattish throughout the year. Recall the government had intervened when GIDC was imposed and prices raised in return. Urea prices ever since have been in check and international commodity prices have also softened up. There is no immediate upward threat to urea prices, which could ideally result in high off-take.
But this is where the floods could have a telling impact. Sowing for Rabi season is reportedly delayed in some parts and the farmers economy has suffered. A likely delay in urea off-take is in the offing, as farmers heal from the floods losses.
Urea inventory sits at a 12-month low of 183 thousand tons, which should have been a worry under normal circumstances. But the likely delay in off-take, coupled with timely planned imports and more importantly adequate supply of gas proposed for local production during peak winters, all hint at sufficient availability for the Rabi season.
What is likely to suffer most, sadly, is the DAP fertiliser application to the soil. Pakistans nitrogen to phosphate application ratio is already one of the lowest in the world, despite several efforts in the past. Farmers have usually resorted to buying urea in distressed times at the expense of DAP. The huge pile of 400 thousand tons of DAP inventory is likely to keep waiting for buyers. Next months numbers are eagerly awaited, as they should hint at the extent of floods impact on fertiliser application.