Preliminary data from the Ministry of Fertilisers indicates that sales volumes of the overall complex fertilisers increased by 107% YoY for the industry during May'14 supported by lower base (in May'13 complex fertiliser sales had declined by 62% YoY due to huge inventory in system).
''Indigenous manufactured volumes increased by 122%YoY while imported complex fertiliser volumes increased by 65% YoY during May'14. Urea sales volumes increased by 24% YoY during May'14. On YTD basis (Apr/May'14) complex fertiliser volumes have increased by 107% YoY driven by 125% YoY increase in manufactured volumes. Going forward, we expect complex fertilizer volumes to increase by 15‐20% YoY in FY15E supported by increase in indigenous volumes,'' said Prabhudas Lilladher (PL).
''However, El‐Nino remains a key risk. Global DAP prices which went up sharply from USD 350/mt in Dec'13 to USD 500/mt in Mar'14 are currently quoting at USD 450/mt. At current global DAP prices of USD 450/mt, imports might resume again as margins for importers' remains healthy. Delay in subsidy payouts continue to plague the sector and we expect working capital requirements to remain stretched over the next few quarters,'' it said.
''Going forward, with the emergence of a stable, decisive and industry‐friendly government at the Centre, we expect reforms in fertiliser sector (New Urea Investment Policy, increase in urea prices, partial urea decontrol, timely subsidy payouts etc.) to kick‐in gradually over the next couple of years,'' the broking firm added.
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