Urea offtake surged to some 6.2 million tons during the last year (CY2019) supported by attractive wheat support price.

According to industry sources, overall urea offtake clocked-in at 6.19 million tons during 2019 compared to some 5.8 million tons in 2018, showing an increase of some 6.8 percent.

Urea sales also witnessed a phenomenal jump of 84 percent to 1.307 million tons during December 2019 against some 0.7 million tons in December 2018. The massive surge in December 2019 was due to lower sales during October and November 2019 as growers were expecting some reduction in urea prices.

Industry sources say this is the highest-ever monthly urea offtake and with record urea sales during last month, overall carryover stocks of urea have also reached below 0.2 million tons in the first week of January 2020.

Last year, the government resumed gas supply to two fertilizer plants, ie, Agritech and Fatima Fertilizer. These plants were operating on imported RLNG. These two plants cumulatively produced some 0.8 million during 2019 and help to avert the shortage in the domestic market.

The supply of RLNG and production of these two plants not only averted shortfall of urea in domestic market during 2019, the country's fertilizer industry was also able to produce highest-ever 6.2 million tons urea, sources said.

They said that the Fertilizer Review Committee in its recent meeting has also acknowledged that gas supply to these two plants has helped avoid urea shortage in the domestic market during last year.

The government provided gas to two fertilizer companies operating on the SNGPL network at USD 6.5/MMBTU during 2019, which was 47 percent higher than the weighted average industry rate for fertilizer feed and fuel gas.

These two manufacturers sold urea at the prevalent local price of Rs 2,040 per bag, which was 25 percent less than the landed cost of imported urea. Moreover, distribution of urea by local manufacturers remains more efficient.

As per industry estimates, the urea demand in 2020 is expected at 6.1 million tons while production (excluding two RLNG-based fertilizer manufacturers) will be around 5.4 million to 5.5 million tons.

There is need that the government should operate both the fertilizer plants for at least 10 months to bridge the expected shortfall of 0.6 million tons of urea in 2020 and save the prestigious foreign exchange reserves, they maintained.