Urea demand during August 2004 depicted an increase of 13.4 percent to 449,000 tons, against 396,000 tons during the corresponding month of last year, because of cheaper finance available to farmers from local financial institutions.
According to the figures released by National Fertiliser Development Centre (NFDC), cumulative urea off-take during the first eight months of 2004 stood at 2.92 million tons, approximately 8 percent higher compared to 2.71 million tons during the preceding year.
DAP demand during August 2004 portrayed a massive 203 percent increase to 106,000 tons as against just 35,000 tons of last year.
NFDC has stated that the surge in DAP off-take was partially attributable to the normalisation of the off-take pattern and partly to the aggressive sales strategies adopted by marketing companies to offload inventories.
Overall improved fertiliser demand was a consequence of cheap and extended credit accessibility to farmers amid the reported satisfactory conditions of cotton and paddy crops on which most of fertiliser in Kharif is used.
During August 2004, urea sales in Punjab were down 2.3 percent while in Sindh urea off-take surged by 57.2 percent.
According to NFDC, the price of Urea Sona at approximately Rs 457 per bag portrayed a marginal 0.3 percent decline.
DAP price at around the Rs 926 per bag level showed an approximately 1 percent decrease. Nonetheless, urea prices on the global front depicted a firm trend with FOB bulk Yuzhny urea and Middle East bagged urea was respectively quoted in the range of $204-215 per ton and $235-240 per ton as against $176-215 per ton and $220-225 per tons during July 2004.
DAP prices during August were quoted respectively at US $220-225 per ton and US $250-253 per ton in the US Gulf and Jordan Market compared to US $217-225/ton and US $206-221/ton during the previous month.
Fertiliser demand outlook going forward is lukewarm. Severe concerns have been expressed over the water availability situation in the back of inadequate rains this year.
NFDC has stated that with domestic production at around 2.45 million tons, supply would not be adequate.
Consequently, imports are to make up for any shortfall. Cumulative nutrient off-take during April - August 2004 registered an impressive 11.6 percent increase compared to year ago. Nitrogen, phosphate and potash off-take respectively increased by 4.9 percent, 57 percent and 24.8 percent.
According to Mohsin Ahsan, research analyst from Global Securities, in view of strong urea off-take growth, the government is thinking of importing the commodity in case of shortage.
However, the scenario is unlikely to remain robust during the winter season due to expected water shortage of around 40 percent during Rabi.
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