Demand likely to pick up soon: domestic fertiliser utilisation remains low: industry

The domestic fertiliser consumption remained subdued during the first 10 months of the calendar year 2012 (CY12). However, industry sources estimated that urea and DAP demand was expected to increase following the government's decision to increase the wheat support prices by Rs 150 to Rs 1200 per 40kg. Moreover, any positive development on the gas supply issue would also support the local fertiliser production.
According to a report compiled by the National Fertiliser Development Centre (NFDC), during January-October period of CY12, overall fertiliser off take decline by 15 percent year-on-year (YoY) to 5.6 million tons because of various issues constricting production, which dropped by 17 percent YoY to 4.7 million tons against the same period last year.
Urea market remained dormant during the period under review, as the total off take stood at 3.98 million tons against 4.76 million tons during the same period last year, showing a 16 percent decline YoY. Urea imports flooded the market by as much as a million tons during the first 10 months of CY12, contributing as much as 26 percent to the total off take because of significant gas supply problems.
DAP volume also declined during January-October of CY12, as the product's off take stood at 835,000 tons, showing a minimal decline of 2 percent YoY. As the sole producer, FFBL's sales down by 19 percent YoY to 422,000 tons, posting a decline of 8 percent YoY in production during the period.
Urea off take during October this year remained dry as a decline of 11 percent month-on-month (MoM) decline was witnessed, with cumulative consumption remaining at 234,000 tons during the month. Urea availability in the market during the month (October) also rose by 18 percent on a monthly basis to 1.1 million tons. Overall, Urea production improved by 4 percent MoM to 340,000 tons during October this year, while urea imports kept piling up closing inventories in the market to 881,000 tons.