Inside Financial Markets

Government may raise urea export quota by 100 percent

Following the demand of the industry, the federal government is likely to increase the urea export quota by 100 percent to 6 million tons. Fertiliser industry is expecting that the domestic urea demand, during this year, will remain flat. Last year, some 5.5 million to 5.6 million tons urea was consumed by farmers. Therefore, the domestic fertiliser manufacturers have asked the government to effect an increase in the quota to help export the surplus commodity.

Industry sources told Business Recorder on Friday that earlier this year, the government had allowed local manufacturers to export 300,000 tons of urea by the end of April 2017. Out of the allocated quota, domestic producers hardly exported some 40,000 tons of the commodity to East Africa region at an estimated Freight on Board (FoB) price of $230-240 per ton.

They said presently urea producers are facing difficulties in export of the commodity as the international urea prices are under pressure and likely to remain depressed in coming days. The lower urea price in the world market is the main reason behind slow exports, they added. As the already allocated urea export quota has not been consumed by manufacturers and surplus urea stocks are lying in the country, the domestic industry is seeking an increase in the export quota as well as extension in export deadline. Accordingly, several meetings were held between the Fertiliser Review Committee (FRC) and urea producers and finally the committee has agreed to propose an increase in the urea export quota and its deadline.

Industry sources said that the FRC has sent a proposal to the Ministry of Industries and Production for increase in the export quota by 100 percent to 6 million tons and extension in its deadline up to Dec 31, 2017. Ministry of Industries will put this proposal in the next meeting of the Economic Co-ordination Committee to get a formal approval, they added.

“We are hopeful that the federal government (ECC) will approve the proposal of the ministry as sufficient stocks of urea are available in the country,” industry sources said. Presently, the domestic market has an inventory of about 1.5 million tons of urea and there will be no shortage in the local market if the government allows the export of 500,000 tons to 600,000 tons, which is surplus urea, they added. They said domestic urea producers are aggressively looking for export opportunities in various countries, including East Africa and Afghanistan to export the surplus urea and bring foreign exchange in the country.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)