KARACHI: Urea sales grew five percent year-on-year to 2.87 million tons in the last six months as buyers rushed to pile up stocks ahead of price hike and rainfalls boosted its demand for summer crops, a brokerage reported on Thursday.

Urea sales stood at 2.72 million tons in the corresponding period a year earlier.

Analyst Sunny Kumar at Topline Research said the growth in urea off-take was on the back of pre-buying by dealers/farmers amid expected hike in urea prices as the government was set to increase gas prices with effect from July 2019.

The government in June increased prices of gas by up to 191 percent. Gas tariffs for fertiliser sector were raised by 31 percent, while the increase was 62 percent in feedstock for old fertiliser plants.

Kumar said timely rainfall across the country also pushed up volumetric sales of urea.

In January-June, urea production grew 13 percent year-on-year due to resumption in production by Fatima Fertilizer and Agritech Limited (AGL), contributing 393,000 tons cumulatively versus nil in the corresponding period a year earlier. Industry’s urea closing inventory for 1H2019 closed at 178,000 tons.

Among local producers, Engro Fertilizer (EFERT) witnessed a significant decline of 10 percent year-on-year as the company carried inventory of 184,000 tons in January 2018, which came down to 10,000 tons in the beginning of this year. EFERT’s urea sales fell to 897,000 tons in January-June from 994,000 tons in the corresponding period a year earlier.

Fauji Fertilizer Company (FFC) saw a four percent decline in urea sales to 1.18 million tons. AGL recorded 134,000 tons of urea off-take in the period under review as compared to 5,000 tons a year earlier.

Fauji Fertilizer Bin Qasim (FFBL) witnessed 16 percent decline in urea sales to 214,000 tons.

Sales of diammonium phosphate (DAP) fell 16 percent to 572,000 tons due to increase in DAP prices by more than 20 percent. DAP sales in the corresponding period a year ago stood at 682,000 tons.

FFC witnessed the biggest decline in percentage terms in sales. It sold 83,000 tons of DAP in January-June compared with 186,000 tons in the corresponding period a year earlier, showing a decline of 55 percent year-on-year. FFBL’s DAP sales fell three percent to 202,000 tons in the January-June period. EFERT, however, saw a six percent increase in DAP sales to 185,000 tons in the first half.

Kumar said key risks to fertiliser sector include an unfavourable settlement of gas infrastructure development cess, poor crop season, and increase in gas prices.