Fertilizer offtake fell by 6 percent during the first five months of current calendar year owing to decline in local production. According to National Fertilizer Development Centre (NFDC), Fertilizer offtake stood at 2.9 million tons in first five months (January-May) of 2011 compared with 3.11 million tons in the same period of last fiscal year, down by 6 percent.
With a decline of 13 percent cumulative offtake decreased to 643,000 tons from 735,000 tons in May last year. "Enhanced gas curtailment since the start of the year and additional shutdown of Fertilizer plants in February-March period were the main reasons for the decline in the offtake," said Bilal Qamar an analyst at JS Global. With Engro''s new 1.3 million tons plant offtake is likely to improve going forward, however, additional gas curtailment being a risk to our thesis, he added.
Cumulative DAP offtake in January-May 2011 registered a decline of 13 percent YoY to stand at 245,000 tons from 280,000 tons in same period of last fiscal year. Prime reason for the decline was the additional shutdown days for FFBL''s plant during first quarter. High DAP prices of over Rs 4,000 per bag continued to be the main irritant as the offtake in May stood at 30,000 tons, down by 39 percent.
Moreover, summer usually remains a slow period for DAP offtake. Urea sales slid down due to enhanced gas curtailment since the start of the year and additional shutdown days for the Fertilizer plants. Urea offtake registered a fall of 11 percent YoY in first five months of current calendar year. Analysts believe that the offtake numbers are likely to improve due to recently announced commencement of Engro''s new plant.