Fertilizer volumes to see strong December rebound, but 2024 sales still lag

Engro Fertilizers is expected to emerge a winner from the year-end sales surge on the back of its price cuts and more aggressive marketing campaigns In a promising turn of events for Pakistan’s agricultural sector, the country’s fertilizer industry is poised to end 2024 on a high note, with urea sales expected to surge in December. However, this late-year rally isn’t quite enough to offset the overall decline in fertilizer sales for the full year, according to recent reports from two of Pakistan’s leading investment banks. Both Topline Securities and BMA Capital, Karachi-based investment banks, project a significant uptick in urea sales for December 2024.

Topline Securities anticipates urea sales to reach 1.002 million tons, marking a substantial 60% year-on-year increase compared to December 2023’s 628,000 tons. BMA Capital’s forecast is similarly optimistic, projecting December urea sales at 1.



000 million tons, representing a 59% year-on-year growth. This sharp increase is attributed to seasonal demand during the peak Rabi season, with both reports noting a month-on-month growth of 53% from November 2024. The surge in December sales is particularly noteworthy when compared to the five-year average for the month, which Topline Securities reports as 857,000 tons.

Despite the strong finish to the year, both investment banks report that the overall urea sales for 2024 are expected to show a slight decline compared to 2023. Topline Securities projects total urea sales for 2024 at 6.587 million tons, down 1% from 6.

64 million tons in 2023. BMA Capital’s estimate is nearly identical, forecasting 6.585 million tons for 2024, also representing a 1% year-on-year decrease.

This marginal decline in annual sales underscores the challenges faced by the fertilizer industry throughout much of 2024. Topline Securities notes that urea sales in the first 11 months of 2024 were down by 7% year-on-year, totaling 5.58 million tons.

The strong December performance, while encouraging, was not quite enough to completely offset the slower sales earlier in the year. While urea dominates the fertilizer market in Pakistan, DAP sales also play a significant role. Both reports indicate a modest increase in DAP sales for December 2024 and the full year.

Topline Securities expects DAP sales in December 2024 to reach 151,000 tons, up 9% year-on-year but down 40% month-on-month. For the full year 2024, they project DAP sales of 1.641 million tons, a 4% increase from 2023.

BMA Capital’s figures are slightly more conservative but follow the same trend. They anticipate December 2024 DAP sales of 149,000 tons, an 8% year-on-year increase, and full-year 2024 sales of 1.639 million tons, also up 4% from 2023.

Engro vs Fauji The reports provide detailed insights into the performance of Pakistan’s major fertilizer manufacturers, with Engro Fertilizers (EFERT) emerging as the clear frontrunner in the December sales surge. Both Topline Securities and BMA Capital highlight EFERT’s exceptional performance in December 2024. Topline Securities expects EFERT to record a 100% year-on-year increase in urea sales, reaching 422,000 tons for the month[ BMA Capital’s projection is even more optimistic, forecasting 423,000 tons, representing a 101% year-on-year growth.

This remarkable growth is attributed, in part, to EFERT’s strategic pricing decisions. Topline Securities reports that EFERT announced an incentive of Rs100 per bag for dealers in December 2024, continuing a strategy mentioned in their last analyst briefing. BMA Capital notes that EFERT offered a discount of Rs30 per bag to recoup market share.

Despite the strong December performance, both reports indicate that EFERT’s full-year 2024 urea sales are expected to decline by 9% compared to 2023[1][2]. This suggests that the company’s aggressive year-end strategy was aimed at recovering ground lost earlier in the year. Fauji Fertilizer Company (FFC), traditionally EFERT’s main rival, is also expected to see significant growth in December, albeit not as dramatic as EFERT’s.

Topline Securities projects FFC’s December urea sales at 309,000 tons, up 35% year-on-year, while BMA Capital forecasts 307,000 tons, a 34% increase. For the full year 2024, both reports anticipate FFC to buck the industry trend with a 5% increase in urea sales compared to 2023. This growth, while modest, positions FFC as one of the better performers in the industry for the year.

Other major players Fauji Fertilizer Bin Qasim (FFBL): Both reports project substantial year-on-year growth for FFBL in December 2024. Topline Securities expects FFBL’s urea sales to reach 68,000 tons (up 175% YoY), while BMA Capital forecasts 69,000 tons (up 180% YoY). For the full year 2024, both reports anticipate a 55% increase in FFBL’s urea sales compared to 2023.

Fatima Group: Topline Securities projects Fatima Group’s December urea sales at 146,000 tons (up 34% YoY), with BMA Capital forecasting a similar 144,000 tons (up 32% YoY). Both reports expect Fatima Group to see a modest 4-5% increase in full-year 2024 urea sales. Competitive landscape The December 2024 sales surge has reshaped the competitive landscape of Pakistan’s fertilizer industry, particularly in the urea segment.

EFERT’s aggressive pricing strategy and resulting sales growth have significantly altered market shares for the month. According to BMA Capital’s data, the December 2024 urea market share breakdown is as follows: – EFERT: 42.3% – FFC: 30.

7% – Fatima Group: 14.4% – FFBL: 6.9% – Others: 5.

7% This represents a substantial shift from historical norms, with EFERT gaining significant ground against its traditional rival, FFC. The rivalry between these two industry giants has long been a defining feature of Pakistan’s fertilizer market, and EFERT’s December performance suggests a potential reshaping of this dynamic. However, it is important to note that this dramatic shift in December may not be indicative of the full-year picture.

Both companies have seen different trajectories over the course of 2024, with FFC managing to grow its annual sales while EFERT faced a decline despite its strong finish. The surge in December sales has had a significant impact on urea inventory levels. Topline Securities estimates that the closing inventory of urea will be around 373,000 tons in December 2024, down from 756,000 tons in November 2024.

BMA Capital provides a similar estimate of 375,000 tons for December 2024. This sharp reduction in inventory levels could have implications for pricing and availability in the early months of 2025. While the current inventory levels are still higher than the 104,400 tons reported in December 2023, the rapid drawdown could lead to tighter supply conditions if demand remains strong.

Topline Securities provides a breakdown of company-wise inventory levels, with Fatima Group holding the highest at 162,000 tons, followed by EFERT at 117,000 tons, and the combined inventory of FFC and FFBL at 39,000 tons. This disparity in inventory levels could influence competitive dynamics in the coming months. DAP market dynamics While urea dominates the headlines, the DAP market also shows interesting trends.

FFBL emerges as the clear market leader in DAP sales for December 2024, with both reports projecting sales of around 70,000-71,000 tons. This represents nearly half of the total expected DAP sales for the month. FFC and EFERT play smaller roles in the DAP market, with December 2024 sales projections ranging from 18,000-20,000 tons for FFC and 12,000-13,000 tons for EFERT.

The DAP inventory situation differs from urea, with closing inventory expected to increase year-on-year. BMA Capital projects DAP closing inventory at 85,000 tons in December 2024, up from 24,700 tons in December 2023. The strong finish to 2024 sets an interesting stage for Pakistan’s fertilizer industry in 2025.

Several key factors will likely influence the market: While the December 2024 surge in fertilizer sales, particularly urea, provides a positive note for the industry, it also sets the stage for an intriguing and potentially volatile market in 2025. The shifting dynamics between major players like EFERT and FFC, coupled with broader economic and agricultural factors, will require close monitoring as the industry moves into the new year. Save my name, email, and website in this browser for the next time I comment.

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