20000228

Minfal allows

export of

100,000 tonnes

urea

RECORDER REPORT

KARACHI: The Ministry of Food and Agriculture has granted permission to export 100,000 tonnes of urea as the country is expected to have a surplus of over 400,000 tonnes in 2000, sources close to fertilizer industry said.

The local production in 1999 was 17.8 percent higher than 1998 as it reached 3.96 million tonnes from 3.36 million tonnes. The imports were at 0.43 million tonnes while total demand was 4.08 million tonnes, giving 0.43 million tonnes as the opening stock for 2000.

This is a positive factor for the sector said a leading manufacturer and might help recover companies from the last year's dull period. He expects the country can export 100,000 tonnes of urea making the local manufacturers more profitable.

The government has allowed export of urea as the local prices are much less than the international market prices. Therefore, the agriculture ministry has recommended that the private sector might sell the urea at international $120-$130 per tonne against the prevailing market price of $150 per tonne to attract buyers towards seller like Pakistan. The ratio of local production and the demand has risen to 97 percent from 87 percent in 1999, thereby reflecting the self-sufficiency in urea production.

An analyst from IP Securities believes that with Fauji Jordan already in commercial production, the local producer with 0.4 million tonnes as beginning inventory can easily meet the domestic demand of 4.20 million tonnes expected in 2000.

There has been no threat to local makers of urea from imports as there has been rise in international prices and the government has imposed 10 percent regulatory duty to protect local industry. The step was aimed to discourage cheap imports in the country and also saving foreign exchange. Analysts believe that with the recovery heralded in the agricultural sector following increase in the cotton crop size and rise in wheat support prices, the local manufacturers are likely to experience above average growth over the next 12 months.

The official estimates showed that urea off-take in Kharif (April-Sept) would be around 2.050 million tonnes while in Rabi (Oct-Mar 2000) it is expected to be around 2.157 million tonnes. Hence the total off-take would be around 4.207 million tonnes in this year.