Key facts
- Pakistani DAP inventories increased by 48,000t in June to 268,000t.
- Domestic DAP demand fell to 48,000t, its lowest point since January.
- DAP prices ex-Karachi have stayed above Rs15,000/50kg bag since mid-May.
- Total estimated DAP offtake for 2026 is projected to be below 1 million tonnes.
- Fauji plans to continue producing DAP at near-capacity levels.
Pakistani Diammonium Phosphate (DAP) inventories saw their largest month-on-month increase since January in June, rising by 48,000 tonnes to reach 268,000 tonnes. This build-up occurred as domestic demand remained significantly below seasonal expectations and below the 2021-25 June average. Domestic output, though slowing to 52,000 tonnes, still outpaced demand. The arrival of 45,000 tonnes of Saudi Arabian DAP further contributed to the rising stock levels.
Farmers are finding DAP increasingly unaffordable, with prices ex-Karachi consistently above Rs15,000 per 50kg bag since mid-May. This price point has led to demand destruction, with importers warning of a shift towards alternative fertilizers like Single Super Phosphate (SSP) and nitrophos.
Fresh import activity for the remainder of the quarter is unlikely, as distributors anticipate weak domestic offtake for the year. Global DAP prices are expected to remain elevated due to potential demand from Bangladesh and India, which could limit the possibility of price drops allowing for profitable domestic sales in Pakistan.
Suppliers are finding it difficult to increase domestic DAP prices without further deterring buyers. The consensus among suppliers suggests that total DAP offtake for 2026 will not exceed 1 million tonnes, a substantial decrease of approximately 35% compared to the yearly average observed between 2021 and 2025. This reduction is expected to be most pronounced during the peak season in the fourth quarter.
The government's cessation of support for wheat purchases last year, coupled with uncertainty regarding future subsidy schemes due to potential revenue constraints, adds to the challenging market conditions. Despite the limited demand, conglomerate Fauji has stated its intention to maintain DAP production at near-capacity levels for the remainder of the year. Consequently, Pakistan is anticipated to largely stay out of the international DAP market for the rest of 2026, leaving limited room for private-sector importers.