Local fertiliser demand drops to lowest ever after influx of foreign fertiliser

Local fertiliser demand drops to lowest ever after influx of foreign fertiliser

Tuesday, May 29, 2012: The demand for local fertilisers has reached a record low after the huge supply of cheap foreign fertiliser in the market. This gap has resulted in huge unsold inventory level for local fertilisers in the
month of April.

Unsold stock stood at a whopping 0.94 million during the previous month as compared to average of 0.28 million tons, says an Elixir Securities research note issued on Monday. The previous record high of 0.81 million tons was posted
in May 2007.

Local fertiliser manufacturers have been second best to their imported counterparts in 2012 as price of imported fertiliser stands much lower due to the partial payment made by the government for them in the form of subsidies.

Imported fertiliser contributed a whopping 51% to total urea sales while locally manufactured goods comprised 49% in April. The surge is huge considering the fact that imports made up only 17% of total sales in the same month last
year.

The government’s reliance on imports has eased the demand of the commodity for now, however, this will have a huge hit as far as the country’s fiscal management is concerned as the fertiliser import bill reached $848 million during
the first seven months of the current financial year against a total of $300 million during same period last year.

In most instances when inventory level crosses the 0.5 million tons mark, it is followed by a massive drawdown. Will that happen this time around is still not clear, adds the note.

The government recently placed a urea import tender for 100,000 tons although it had initially stated its intention to purchase close to 300,000 tons.

“Details haven’t transpired as to why the government may have lowered its import target, however there is a possibility that locally manufactured fertiliser could be bought instead,” says the note.

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Posted by Wajahat Javed on May 30 2012. Filed under Business, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry