Fertilizer Offtake in August 2006…
Synopsis… National Fertilizer Development Centre (NFDC) released the data for the month of August, 2006. Industry's Urea production and offtake during the month of August at 387k tons and 384k tons was down by 3% and 11% on m-o-m basis respectively. Whereas, DAP production and sales when compared to month of July were down by 5% and 70% at 40k tons and 32k tons. Urea and DAP inventories have further surged by 13% to 430k tons and 435k tons at the end of August when compared to previous months inventories at 379k tons and 386k tons. Marginal change was witnessed in the prices of Urea and DAP during the month which settled at PRs528.7/bag and 1076.8/bag respectively.
Offtake for Kharif 2006 (April-August)… With the Kharif season coming to an end, c umulative Kharif (April-August) 2006, Urea offtake was about 2,066k tons, which declined by 4.6% while DAP was 355k tons, which also went down by 32% over Kharif 2005. The downward trend in Kharif 2006 over 2005 as appeared from offtake figures does not reflect the true picture, as offtake of DAP during Feb-April 2006 was higher. Hence its carryover was used during peak months of Kharif season.
Mounting Inventories… Urea and DAP inventories have been piling up since the month of April and has reached to 430k tons and 435k tons, up by 136% and 48%, as at the end of April the inventories stood at 182k tons and 293k tons respectively. The major reason for the increase in inventories can be attributed to the recent rumor of cross subsidy mechanism which has not yet materialized and because of which DAP users are foreseeing a reduction in per bas prices hence lesser offtake.
Cancellation of DAP Import Orders… Importers of DAP fertilizer are in a fix as their three import cargo contracts worth around US$31m have been cancelled. Importers had made contracts of around 105k tons of DAP fertilizer at an average cost of US$295/ton. The major reason behind the cancellation of further imports orders are:
· Heavily piled up inventories.
· Uncertainty over the cross subsidy issue.
· There is no crop in the field that needs DAP application at this stage.
The federal government announced to give subsidy on DAP import after getting approval from the Economic Co-ordination Committee (ECC); however, the decision has not yet been taken. Farmers and distributors have refused to procure and sell DAP fertilizer as they are anticipating implementation of the decision regarding subsidy, which would bring down its prices in the domestic market.
Going forward… it is expected that DAP offtake it to remain low in the month of September and October as sowing for Rabi crop starts further late. We maintain our like for FFC and FFBL at current price levels, however if ENGRO or FFC is announced as the successful bidder for new gas plant than it can trigger price appreciation in FFC or ENGRO.
Hettish Karmani
[/size]Research Analyst
Atlas Capital Markets (Pvt) Ltd
23/09/2006
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2012 replies to this topic
#13
Posted 24 September 2006 - 11:44 PM
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Abdul Mateen Khan
#14
Posted 28 September 2006 - 07:43 AM
Urea up by 2.5 per cent, DAP down by 18.5 per cent
MASHIUR RAHAMAN
KARACHI - As per latest fertilizer data released by National Fertilizer Development Centre (NFDC), urea off-take during 8 months (Jan-Aug) of 2006 stood at 3.41m tons, up by 2.5 per cent, versus 3.32m tons sold in same period of last year. Whereas, DAP sales depicted a decline of 18.5 per cent. Following is the detail analysis of the Aug 2006 fertilizer data and expert’s outlook for 2006.
Owing to the erratic rainfall pattern in the country, floods and the use of carryover stock in Aug 2006, growth in urea sales (which stood at over 9 per cent in 1H2006) subsided to stand at just 2.5 per cent in first 8 months of 2006. Total urea sales in this period stood at 3.41m tons compared to 3.32m tons sold in same period last year. Alone in Aug 2006, which is peak month of the Kharif season, urea sales dropped sharply by 15 per cent to 384k tons as against 452k tons sold in Aug 2005.
Source Atif Malik from the Jahangir Siddiqui Capital Research informed The Nation that the Urea production, on the other hand, also decreased to 387k tons for Aug 2006 compared to 401k tons produced in Jul 2006 (a decline of 3 per cent). Main reason behind this was low production from Dawood Hercules, which went through maintenance in Aug 2006.
Meanwhile, source Hettish Kirmani from the Research Department, Atlas Capital Markets (Pvt.) Limited further informed The Nation that the Urea and DAP inventories have further surged by 13 per cent to 430k tons and 435k tons at the end of August when compared to previous month’s inventories at 379k tons and 386k tons. Marginal change was witnessed in the prices of Urea and DAPS during the month, which finally settled at Rs528.7/bag (-0.17 per cent) and Rs1076.8/bag (+0.18 per cent) respectively.
During Aug 2006, 58k tons of imported urea was also brought into the industry to cover up the demand supply gap. Whereas, in 8 months of 2006, 648k tons of urea has so far been imported. The given table provides urea demand & supply details during Jan-Aug 2006.
Likewise urea sales, DAP sales which remained very high during Feb-April 2006, lost its growth momentum in Jul-Aug 2006. As total DAP sales during first 8 months of 2006 stood at 500k tons versus 613k tons sold in same period last year - a decline of 18.5 per cent. Besides over buying in 1H2006 & peculiar rainfall pattern, news regarding subsidy on DAP was another factor which affected overall offtake. In Aug 2006 alone, DAP sales almost halted as they stood at just 32k tons versus 103k tons in Aug 2005 - a massive fall of 69 per cent. During Aug 2006, local DAP production, which is done solely by Fauji Fertilizer Bin Qasim (FFBL), remained steady at 55k tons. While 41k tons of imported DAP was also added into the industry during the month. Overall, in 8 months of 2006, 359k tons of DAP have so far been imported.
According to the NFDC Fertilizer Review August, 2006, the demand and supply figure for the Urea & DAP for the first 8 months of 2006 was, the opening inventory, demand and supply for Urea was 45 thousand tones and for the DAP was net 291 thousand tones. For the Imported supplies, Urea demand and supply figure was net 648 thousand tones and the DAP figure was net 359 thousand tones. On the other hand, to the Domestic production, demand and supply figure for Urea was 3163 thousand tones and the DAP managed the figure at 287 thousand tones.
Total availability demand and supply figure for the Urea was 3856 thousand tons and for DAP, the figure was 937 thousand tons. Total Offtake demand and supply figure was 3406 thousand tons and for the DAP, the figure was 497 thousand tons. Write off/on demand and supply figure for the Urea was 20 thousand tons and the DAP figure was net 4 thousand tons. Total estimated Balance in demand and supply during the first eight months of 2006 for Urea was 430 thousand tons and for DAP, it was 435 thousand tons.
With the Kharif season coming to an end, cumulative Kharif (April-August) 2006, Urea off-take was about 2,066k tons, down by 4.6 per cent while DAP off-take was 355k tons, which declined by 32 per cent over Kharif 2005. The downward trend in Kharif 2006 over 2005 as appeared from off-take figures does not reflect the true picture, as off-take of DAP during Feb-April 2006 was higher, hence its carryover was used during peak months of Kharif season.
Urea and DAP inventories have been piling up since the month of April and have reached 430k tons and 435k tons, up by 317 per cent and 63 per cent, as at the end of March the inventories stood at 103k tons and 267k tons respectively. The major reason for the increase in inventories can be attributed to the recent news of application of cross subsidy mechanism which has not yet materialized and because of which DAP users are foreseeing a reduction in per bas prices hence lesser off-take.
Atif Malik from the JS Research also reported that, as per the data complied by NFDC in its publication ‘Annual Fertilizer Review 2005-06’, in FY06 at national level, total consumption of nutrients per hectare of gross cropped area stood at 169kg/ha. In FY05, this was recorded at 161kg/ha - depicting a growth of 5 per cent.
Going forward, for the full year 2006, ‘’we expect growth of 3 per cent in urea sales. This is mainly due to high base effect of last year as in 2003, 2004 & 2005 urea sales grew by 2.7 per cent, 5.1 per cent and 9.8 per cent, respectively. While for DAP sales, we believe, its sales would start to pick up as field for wheat sowing are being prepared. We maintain our ‘Market-weight’ stance on the fertilizer sector, he added’’.
On the other hand, according to the data released by SBP, to-date in FY07 inflow in SCRA (Special Convertible Rupee Account) has reached US$51.5mn. On Sep 22, 2006, a net positive inflow of US$7.8mn was witnessed in portfolio investment. Whereas, cumulatively total inflow for the month of Sep 2006, has been recorded at US$42.1mn
Hettish Karmani from the Atlas Capital also added that the importers of DAP fertilizer are in a fix as their import contracts worth around US$31mn have been cancelled. Importers had made contracts of around 105k tons of DAP at an average cost of US$295/ton. The major reason behind the cancellation of imports orders are the Heavily piled up inventories, Uncertainty over the cross subsidy issue, There is no crop in the field that needs DAP application at this stage.
The federal government announced to give subsidy on DAP import after getting approval from the Economic Co-ordination Committee (ECC); however, the decision has not yet been taken. Farmers and distributors have refused to procure and sell DAP fertilizer as they are anticipating implementation of the decision regarding subsidy, which would bring down its prices in the domestic market. “It is expected that DAP off-take is to remain low in the month of September and October as sowing for Rabi crop (mainly wheat) starts late in November. We maintain our liking for FFC at current price levels, however out of four parties if ENGRO becomes successful in getting gas allocation then we might witness further price appreciation in the scrip”, Hettish Karmani added in conclusion.
MASHIUR RAHAMAN
KARACHI - As per latest fertilizer data released by National Fertilizer Development Centre (NFDC), urea off-take during 8 months (Jan-Aug) of 2006 stood at 3.41m tons, up by 2.5 per cent, versus 3.32m tons sold in same period of last year. Whereas, DAP sales depicted a decline of 18.5 per cent. Following is the detail analysis of the Aug 2006 fertilizer data and expert’s outlook for 2006.
Owing to the erratic rainfall pattern in the country, floods and the use of carryover stock in Aug 2006, growth in urea sales (which stood at over 9 per cent in 1H2006) subsided to stand at just 2.5 per cent in first 8 months of 2006. Total urea sales in this period stood at 3.41m tons compared to 3.32m tons sold in same period last year. Alone in Aug 2006, which is peak month of the Kharif season, urea sales dropped sharply by 15 per cent to 384k tons as against 452k tons sold in Aug 2005.
Source Atif Malik from the Jahangir Siddiqui Capital Research informed The Nation that the Urea production, on the other hand, also decreased to 387k tons for Aug 2006 compared to 401k tons produced in Jul 2006 (a decline of 3 per cent). Main reason behind this was low production from Dawood Hercules, which went through maintenance in Aug 2006.
Meanwhile, source Hettish Kirmani from the Research Department, Atlas Capital Markets (Pvt.) Limited further informed The Nation that the Urea and DAP inventories have further surged by 13 per cent to 430k tons and 435k tons at the end of August when compared to previous month’s inventories at 379k tons and 386k tons. Marginal change was witnessed in the prices of Urea and DAPS during the month, which finally settled at Rs528.7/bag (-0.17 per cent) and Rs1076.8/bag (+0.18 per cent) respectively.
During Aug 2006, 58k tons of imported urea was also brought into the industry to cover up the demand supply gap. Whereas, in 8 months of 2006, 648k tons of urea has so far been imported. The given table provides urea demand & supply details during Jan-Aug 2006.
Likewise urea sales, DAP sales which remained very high during Feb-April 2006, lost its growth momentum in Jul-Aug 2006. As total DAP sales during first 8 months of 2006 stood at 500k tons versus 613k tons sold in same period last year - a decline of 18.5 per cent. Besides over buying in 1H2006 & peculiar rainfall pattern, news regarding subsidy on DAP was another factor which affected overall offtake. In Aug 2006 alone, DAP sales almost halted as they stood at just 32k tons versus 103k tons in Aug 2005 - a massive fall of 69 per cent. During Aug 2006, local DAP production, which is done solely by Fauji Fertilizer Bin Qasim (FFBL), remained steady at 55k tons. While 41k tons of imported DAP was also added into the industry during the month. Overall, in 8 months of 2006, 359k tons of DAP have so far been imported.
According to the NFDC Fertilizer Review August, 2006, the demand and supply figure for the Urea & DAP for the first 8 months of 2006 was, the opening inventory, demand and supply for Urea was 45 thousand tones and for the DAP was net 291 thousand tones. For the Imported supplies, Urea demand and supply figure was net 648 thousand tones and the DAP figure was net 359 thousand tones. On the other hand, to the Domestic production, demand and supply figure for Urea was 3163 thousand tones and the DAP managed the figure at 287 thousand tones.
Total availability demand and supply figure for the Urea was 3856 thousand tons and for DAP, the figure was 937 thousand tons. Total Offtake demand and supply figure was 3406 thousand tons and for the DAP, the figure was 497 thousand tons. Write off/on demand and supply figure for the Urea was 20 thousand tons and the DAP figure was net 4 thousand tons. Total estimated Balance in demand and supply during the first eight months of 2006 for Urea was 430 thousand tons and for DAP, it was 435 thousand tons.
With the Kharif season coming to an end, cumulative Kharif (April-August) 2006, Urea off-take was about 2,066k tons, down by 4.6 per cent while DAP off-take was 355k tons, which declined by 32 per cent over Kharif 2005. The downward trend in Kharif 2006 over 2005 as appeared from off-take figures does not reflect the true picture, as off-take of DAP during Feb-April 2006 was higher, hence its carryover was used during peak months of Kharif season.
Urea and DAP inventories have been piling up since the month of April and have reached 430k tons and 435k tons, up by 317 per cent and 63 per cent, as at the end of March the inventories stood at 103k tons and 267k tons respectively. The major reason for the increase in inventories can be attributed to the recent news of application of cross subsidy mechanism which has not yet materialized and because of which DAP users are foreseeing a reduction in per bas prices hence lesser off-take.
Atif Malik from the JS Research also reported that, as per the data complied by NFDC in its publication ‘Annual Fertilizer Review 2005-06’, in FY06 at national level, total consumption of nutrients per hectare of gross cropped area stood at 169kg/ha. In FY05, this was recorded at 161kg/ha - depicting a growth of 5 per cent.
Going forward, for the full year 2006, ‘’we expect growth of 3 per cent in urea sales. This is mainly due to high base effect of last year as in 2003, 2004 & 2005 urea sales grew by 2.7 per cent, 5.1 per cent and 9.8 per cent, respectively. While for DAP sales, we believe, its sales would start to pick up as field for wheat sowing are being prepared. We maintain our ‘Market-weight’ stance on the fertilizer sector, he added’’.
On the other hand, according to the data released by SBP, to-date in FY07 inflow in SCRA (Special Convertible Rupee Account) has reached US$51.5mn. On Sep 22, 2006, a net positive inflow of US$7.8mn was witnessed in portfolio investment. Whereas, cumulatively total inflow for the month of Sep 2006, has been recorded at US$42.1mn
Hettish Karmani from the Atlas Capital also added that the importers of DAP fertilizer are in a fix as their import contracts worth around US$31mn have been cancelled. Importers had made contracts of around 105k tons of DAP at an average cost of US$295/ton. The major reason behind the cancellation of imports orders are the Heavily piled up inventories, Uncertainty over the cross subsidy issue, There is no crop in the field that needs DAP application at this stage.
The federal government announced to give subsidy on DAP import after getting approval from the Economic Co-ordination Committee (ECC); however, the decision has not yet been taken. Farmers and distributors have refused to procure and sell DAP fertilizer as they are anticipating implementation of the decision regarding subsidy, which would bring down its prices in the domestic market. “It is expected that DAP off-take is to remain low in the month of September and October as sowing for Rabi crop (mainly wheat) starts late in November. We maintain our liking for FFC at current price levels, however out of four parties if ENGRO becomes successful in getting gas allocation then we might witness further price appreciation in the scrip”, Hettish Karmani added in conclusion.
Click Here For: "Daily Reports From Different Brokerage Houses"
Note: Please make your own due diligence before making any decision
Regards,
Abdul Mateen Khan
#16
Posted 29 September 2006 - 06:37 AM
Fertilisers except urea subsidised
AFTAB MAKEN
ISLAMABAD (September 29 2006): The government has decided to subsidise all the phosphatic and potash fertilisers to reduce the cost of input for farmers and promote their balanced use whereas urea prices would remain the same.
The subsidy on phosphatic and potashic fertilisers involved a financial outlay of Rs 6.182 billion, whereas now the total subsidy on fertilisers including Nitrogenous, Phosphatic and Potashic in 2006-07 would be Rs 12.32 billion.
Federal Minister for Food, Agriculture and Livestock, Sikandar Hayat Khan Bosan, in a press conference here on Thursday, said that the use of balanced fertilisers would not only raise the productivity but also reduce the poverty.
The minister quoting the research findings further said that balance fertilisers use would result in financial gains of Rs 125 billion when it was applied even on a 50 percent cropped area of four major crops (wheat, rice, maize, sugarcane).
Reduction in price per bag would be as follows: DAP, TSP, MOP, SOP Rs 250 each, MAP Rs 257, SSP (P) Rs 98, SSP (G) Rs 109, NP Rs 125 and 109 and NPK Rs 186.
Official sources told Business Recorder that the subsidy would include all the inventories having stocks till the evening of September 30 but for the next crop, it would be only for those, who have imported fertilisers or produced it locally.
"It is a win-win situation for both the farmers and producers-cum-importers and will definitely encourage the sowing of the produce, as the input cost would decrease substantially", the official added. Later, responding to various queries, Bosan said that the exercise was initiated to make the balanced use of fertilisers at par with international practices of 2:1 urea to DAP respectively, whereas currently in Pakistan it was 3.4:1, which was very high.
The Minister hoped that it would definitely benefit 92 percent of the farmers, who did not use the phosphatic or potashic fertilisers due to high cost therefore yield was less. When asked about subsidising electricity, the Minister said that the government was taking all the issues step by step and trying to minimise inputs cost for the farmers.
About the late crushing of sugarcane, the minister said that it was a provincial subject. The Federal Government in consultation with provincial cane commissioners will decide when to start the crushing season.
Meanwhile, a statement of the ministry stated that the public research institutes were making considerable efforts in providing high yielding wheat varieties to growers. Last year, TD1 variety was introduced in Sindh, while three other varieties Sehar 2006 and Shafaq 2006 of Wheat Research Institute Faisalabad and Freed 2006 of Agriculture Research Institute, Bahawalpur were also released.
AFTAB MAKEN
ISLAMABAD (September 29 2006): The government has decided to subsidise all the phosphatic and potash fertilisers to reduce the cost of input for farmers and promote their balanced use whereas urea prices would remain the same.
The subsidy on phosphatic and potashic fertilisers involved a financial outlay of Rs 6.182 billion, whereas now the total subsidy on fertilisers including Nitrogenous, Phosphatic and Potashic in 2006-07 would be Rs 12.32 billion.
Federal Minister for Food, Agriculture and Livestock, Sikandar Hayat Khan Bosan, in a press conference here on Thursday, said that the use of balanced fertilisers would not only raise the productivity but also reduce the poverty.
The minister quoting the research findings further said that balance fertilisers use would result in financial gains of Rs 125 billion when it was applied even on a 50 percent cropped area of four major crops (wheat, rice, maize, sugarcane).
Reduction in price per bag would be as follows: DAP, TSP, MOP, SOP Rs 250 each, MAP Rs 257, SSP (P) Rs 98, SSP (G) Rs 109, NP Rs 125 and 109 and NPK Rs 186.
Official sources told Business Recorder that the subsidy would include all the inventories having stocks till the evening of September 30 but for the next crop, it would be only for those, who have imported fertilisers or produced it locally.
"It is a win-win situation for both the farmers and producers-cum-importers and will definitely encourage the sowing of the produce, as the input cost would decrease substantially", the official added. Later, responding to various queries, Bosan said that the exercise was initiated to make the balanced use of fertilisers at par with international practices of 2:1 urea to DAP respectively, whereas currently in Pakistan it was 3.4:1, which was very high.
The Minister hoped that it would definitely benefit 92 percent of the farmers, who did not use the phosphatic or potashic fertilisers due to high cost therefore yield was less. When asked about subsidising electricity, the Minister said that the government was taking all the issues step by step and trying to minimise inputs cost for the farmers.
About the late crushing of sugarcane, the minister said that it was a provincial subject. The Federal Government in consultation with provincial cane commissioners will decide when to start the crushing season.
Meanwhile, a statement of the ministry stated that the public research institutes were making considerable efforts in providing high yielding wheat varieties to growers. Last year, TD1 variety was introduced in Sindh, while three other varieties Sehar 2006 and Shafaq 2006 of Wheat Research Institute Faisalabad and Freed 2006 of Agriculture Research Institute, Bahawalpur were also released.
Click Here For: "Daily Reports From Different Brokerage Houses"
Note: Please make your own due diligence before making any decision
Regards,
Abdul Mateen Khan
#17
Posted 14 November 2006 - 09:02 PM
FFC
Accumulate in dip n sell on strength..... & also good for short term
Accumulate in dip n sell on strength..... & also good for short term
Click Here For: "Daily Reports From Different Brokerage Houses"
Note: Please make your own due diligence before making any decision
Regards,
Abdul Mateen Khan
#18
Posted 24 November 2006 - 04:20 PM
AbDuLmAtEeNkHaN, on Nov 14 2006, 07:02 PM, said:
FFC
Accumulate in dip n sell on strength..... & also good for short term
Accumulate in dip n sell on strength..... & also good for short term
Hope dip main accumulate kiya hoga 115.50 tak giya tha dip main …... enjoy the ride ....
Click Here For: "Daily Reports From Different Brokerage Houses"
Note: Please make your own due diligence before making any decision
Regards,
Abdul Mateen Khan
