Breather: Gas cost rebate revives hopes of fertilizer exports
KARACHI: Pakistan’s fertilizer sector, that has been confronting tough times via a year, has only been supposing a remit by a government.
The new gas cost rebate has rekindled a seductiveness of domestic fertiliser-makers in trade options, generally with rising general urea prices.
“The trade offer is still being complicated so it could take some time compartment we indeed start exports,” Engro Fertilizers Chief Executive Officer Ruhail Mohammed told The Express Tribune.
“We design prices to brace by afterwards and we will get a satisfactory price. In any case, we will be means to revoke a inventory-holding costs once a over-abundance is exported.”
Recently, a Economic Coordination Committee (ECC) reduced a gas tariff by Rs200 per million British thermal units (mmbtu) for industrial consumers, that was also germane to gas fuel for a fertilizer industry.
Analysts contend due to determined bolt in a attention with approaching register of 1.3 million tons during a finish of Dec 2016, a supervision might potentially concede trade of 800,000 tons of urea to palliate off a situation.
“With an boost of 17% month-on-month in general urea prices (12% in a final dual weeks), pleasantness a convene in spark prices, trade margins will urge if a stream prices stay,” pronounced a new BMA Research report.
According to a report, Engro Fertilizers and Fatima Fertilizer will take a lead in urea exports with estimated margins of $147 per ton, adult 30% from final estimates, and $155 per ton, adult 28%, respectively.
“It’s really going to yield some remit from a stream register bolt faced by a domestic urea manufacturers,” pronounced Mohammed when asked about a impact of gas cost cut.
It is also critical to know that gas cost changes are not indispensably reflected in a urea price. For instance, a final urea cost boost done in Sep 2015 due to a gas cost boost had to be taken behind by urea manufacturers due to bad stand economics and diseased rancher demand, he added.
In a stream situation, he said, it was a tangible direct and register that was pushing urea prices instead of a cost of production, that was staying next a top of Rs1,400 per bag.
Domestic fertiliser-makers furnish approximately 4.5 million tons of urea per year since a direct stands during 6 million tons. The opening of 1.5 million tons is met by subsidised imports.
Mohammed pronounced year 2016 started with an register of 0.5 million tons of urea and it had remained tighten to 1.5 million tons via vital apportionment of a year.
The year-end series is also approaching to be aloft than 1 million tons. These register numbers are unprecedented.
Owing to gas accessibility and LNG imports into a country, all urea manufacturers operated some-more or rebate via a year. However, a direct remained unusually low since of bad stand economics that serve aggravated urea bolt in a country.
Going forward, he said, there were several variables that could change things. For instance, due to funding and rebate in fertilizer prices, plantation economics is approaching to collect adult so a direct could be most higher.
Secondly, with rising wanton prices, a cost of LNG-based urea manufacturers could increase, he added.
The author is a staff correspondent
Published in The Express Tribune, Dec 5th, 2016.
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Article source: http://tribune.com.pk/story/1253293/breather-gas-price-reduction-revives-hopes-fertiliser-exports/