The fertilizer sector in Pakistan is currently navigating a complex landscape with a visible divergence in the demand for Urea and Di-Ammonium Phosphate (DAP). October 2024 marked the seventh consecutive month of decreased Urea sales, contrasting sharply with a strong uptick in DAP sales attributed to seasonal agricultural demands. The following report dives into the factors behind these trends and examines how the main players in Pakistan’s fertilizer industry—Fauji Fertilizer Company (FFC), Engro Fertilizer (EFERT), and Fauji Fertilizer Bin Qasim Limited (FFBL)—are adapting.
Urea Sales Decline Continues
According to provisional data, Urea off-take in October 2024 stood at approximately 360,000 tons, marking a 22% year-on-year (YoY) decline. This fall reflects persistent low demand, largely attributed to the agronomic challenges that farmers face and seasonal fluctuations. The cumulative sales for the first ten months of 2024 (10MCY24) totaled 4.9 million tons, a 9% decrease compared to the same period in the previous year.
Company-Specific Urea Performance
- Fauji Fertilizer Company (FFC): October 2024 sales are estimated at 144,000 tons, down by 12% YoY. Cumulatively for 10MCY24, FFC managed a slight 1% increase, reporting sales of 2.1 million tons.
- Engro Fertilizer (EFERT): The company’s October Urea off-take plummeted by 42% YoY to 99,000 tons, though it saw a 76% month-over-month (MoM) improvement. EFERT’s cumulative 10MCY24 market share declined due to higher gas costs and a temporary plant shutdown.
- Fauji Fertilizer Bin Qasim Limited (FFBL): Amid stable gas supply, FFBL witnessed significant growth, with October sales nearly doubling YoY to reach 35,000 tons.
The Surge in DAP Demand
While Urea sales face hurdles, DAP demand has flourished. October 2024 DAP off-take reached 265,000 tons, a 67% YoY increase, driven by the sowing season for Rabi crops such as wheat. Improved availability of imported DAP, which had previously been constrained, has also supported this growth.
Company-Specific DAP Performance
- FFC: October 2024 DAP sales grew by 89% YoY, totaling 43,000 tons.
- EFERT: Similarly, EFERT saw a 92% YoY increase, reporting 50,000 tons in DAP off-take.
- FFBL: Holding the largest share, FFBL registered a 64% YoY increase, with 113,000 tons in October sales.
Market Share and Pricing Shifts
FFC and FFBL collectively held 51% of the market share in 10MCY24, an 8% increase from last year, aided by competitively lower prices and enhanced gas availability. EFERT, on the other hand, experienced a 5% decline in its market share, mainly due to higher production costs stemming from elevated gas prices and limited production capacity due to plant maintenance.
Competitive Adjustments
To regain lost market share, EFERT implemented a strategic price reduction by offering a Rs100 discount per Urea bag in October 2024. This cut narrowed the price gap with FFC’s Sona Urea from Rs154 to Rs54 per bag, encouraging dealers and customers to favor EFERT’s product.