March 14, 2022 (MLN): Fauji Fertilizer Company Limited (PSX: FFC) has increased the price of urea by Rs 80 per bag based on the Dealer Transfer Price (DTP) to Rs1,803 per bag with effect from March 13, 2022, compared to the previous DTP of Rs1,723 per bag.
In terms of selling prices, the new effective selling prices are Rs1,863 per bag. This is the fertilizer industry’s first urea price increase since August 7, 2021, while selling prices were increased to Rs 1,768 per bag on August 7, 2021, a report by Next Capital said.
The other companies such as EFERT, FATIMA and AGL are likely to report a similar price increase in the coming days so that there is no difference between prices from different manufacturers, it said.
This price increase would offset inflationary pressures, such as transportation, labor and packaging costs, which have not been passed on in the past two quarters.
The report further noted that the smuggling of urea into West Asian countries and extremely low inventory levels have allowed manufacturers to exercise their limited pricing power and raise prices. We believe that this price increase will not deter demand, given the upcoming Kharif season.
According to the prices quoted by NFDC, the selling prices of Sona Urea are already hovering close to Rs1,975 per bag.
If the subsidized feed gas cost Rs302 per mmbtu is increased in line with the fuel cost Rs1,023 per mmbtu, it would require an increase of approximately Rs800 per bag on the ex-refinery basis for FFC to fully pass on the incremental costs.
Similarly, in case of rationalization of GST rates and upward revision of GST rates for urea from 2% to 17%, manufacturers would have to increase urea prices by about Rs 270 per bag to break even on the current DTP levels.
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Posted on: 2022-03-14T12:47:21+05:00
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