Pakistan’s urea sales declined sharply in the first quarter of 2026, falling to 1.04 million tonnes, the lowest level recorded in 24 quarters. The downturn was driven primarily by a demand timing shift, following heavy discounting offered by fertiliser manufacturers in late 2025.
Demand Shift After Discounting
During October–December 2025, major manufacturers offered discounts of up to Rs400 per 50kg bag to reduce high inventory levels. The price cuts prompted dealers to make advance purchases, pulling forward demand that typically appears in early 2026.
With inventories already stocked, dealer buying slowed considerably once the discounts ended, resulting in weak Q1 sales despite stable farmer requirements.
Supply, Production and Inventory Conditions
Although the decline in sales was driven by timing rather than agricultural weakness, the quarter also saw intermittent gas shortages at RLNG-based fertiliser plants, which disrupted production.
Some manufacturers redirected gas allocations toward higher-margin DAP production, tightening urea supply further. Inventory levels, however, have returned to more balanced positions after the late-2025 stock clearance.
Market Share Movements
Fauji Fertiliser Company (FFC) strengthened its position during the quarter, increasing its market share to around 58% due to uninterrupted operations. Other producers, affected by gas-related disruptions and earlier excess inventories, recorded slower dispatches.
Industry analysts expect urea demand to recover gradually ahead of the Kharif season as dealer inventories are drawn down. Annual urea consumption remains strong at above 5.5 million tonnes, indicating no structural weakness in the market.
However, risks remain in the form of gas supply uncertainties, price realignment, and potential production constraints that could influence market behaviour in the coming months.
