Urea sales in Pakistan hit a six-year low in the first quarter of 2026, dropping to 1.04 million tonnes, the lowest level in 24 quarters. This decline follows a period of aggressive discount-led buying in the previous quarter, according to analysts and industry data.
The drop in sales was attributed to the rollback of discounts that had spurred heavy advance purchases in December 2025. Major fertilizer companies, including Engro Fertilisers and Fauji Fertiliser Company (FFC), had offered discounts of up to Rs400 per bag during the fourth quarter, leading to bulk purchases ahead of the Rabi season.
Abdur Rafay, a Fertiliser Analyst at Topline Securities, explained that the decline in sales was primarily due to the high demand in the last quarter of 2025, which resulted in dealers already having sufficient inventory when prices normalized in early 2026.
Despite the decline in sales, industry experts emphasize that this does not reflect weakness in the agriculture sector, as Pakistan's annual urea demand remains strong at over 5.5 million tonnes. Overall fertilizer consumption continues to grow in line with improving farm economics.
Looking ahead, analysts expect urea sales to gradually recover as dealer inventories decrease and demand picks up for the upcoming Kharif season. However, challenges such as potential gas shortages and price differences between domestic and international urea prices could impact the market.
On the other hand, the outlook for DAP fertilizer remains uncertain due to rising global prices and supply constraints. The sector is expected to stabilize in the coming months as market dynamics normalize following the exceptional sales period in late 2025.
Market dynamics were also influenced by supply-side challenges, including gas supply disruptions and production constraints at various plants. FFC strengthened its market position, capturing around 58% of the urea market in early 2026 amidst production constraints at competing plants.
Overall, the decline in urea sales during the first quarter of 2026 is seen as a temporary correction, with underlying agricultural demand remaining robust. Analysts believe the sector will stabilize in the near future as market conditions normalize.
