Pakistani DAP inventories rose by 48,000t in June to 268,000t, their strongest month-on-month increase since January, as domestic demand remained underwhelming.
Domestic output slowed to 52,000t but still outpaced demand last month, research and development agency NFDC data show.
The arrival of 45,000t of Saudi Arabian DAP in the second half of the month further boosted inventories.
Domestic demand fell to its lowest since January at 48,000t, in a period that typically sees a seasonal boost in sales. This is below the 122,000t June average in 2021-25, as farmers see DAP as unaffordable.
Ex-Karachi prices have remained above Rs15,000/50kg bag at the low end since the first half of May. This is above levels in recent years and exceeds the threshold at which importers warned that demand destruction and substitution with SSP and 18-20 "nitrophos" would occur.
Imports deterred by demand destruction
Fresh imports in the rest of the quarter, ahead of the high offtake season for wheat applications over October-November, are unlikely as distributors are bearish about domestic offtake for this year.
The continued closure of the strait of Hormuz and recent escalation in tensions around the Bab-el-Mandeb strait at the mouth of the Red Sea have supported the DAP price outlook for the coming months. The likely emergence of Bangladeshi and particularly Indian DAP demand will tighten availability further and keep prices elevated. This means that global DAP levels are unlikely to slip to a point that would allow margins for domestic sales in Pakistan.
At the same time, suppliers are struggling to raise domestic DAP prices without putting farmers off from buying.
The consensus among suppliers for total 2026 DAP offtake is that the market will not exceed 1mn t of demand, which would be about 35pc lower than the yearly average in 2021-25. The cut will be skewed towards the high season in the fourth quarter.
The government last year also stopped supporting wheat purchases, and while there have been hopes of subsidy schemes in the country, there is no guarantee that the government will have the revenues to support the sector.
Despite limited demand, conglomerate Fauji has indicated that it will keep producing DAP at close to capacity for the rest of this year. This leaves little room for private-sector importers to bring in fresh DAP despite some of them holding low inventories. Pakistan can thus be expected to largely remain out of the international market for the rest of the year.
