Fauji Fertilizer Bin Qasim shuts down DAP plant citing economic downturn

Fauji Fertilizer Bin Qasim Limited (FFBL) announced on Thursday shut down of its DAP (Di-ammonium Phosphate) fertilizer plant citing the economic downturn.

FFBL in a notice to the Pakistan Stock Exchange (PSX), said: “DAP plant has been shut down on December 21, 2022, to more efficiently manage its DAP inventory owing to the demand and supply situation in the market”.

However, the company has refrained from giving a timeline for the length of the shutdown.

FFBL said that during the shutdown period, planned annual maintenance activity will also be carried out in January 2023 to ensure reliability and sustainable safe operations at the plant.

“After the completion of annual maintenance, the startup of the DAP plant will commence based on the DAP market situation,” it added.

“Notwithstanding the temporary closure, the company intends to meet the projected DAP demand in the country. However, the urea plant is operating normally,” FFBL said.

The development comes as fertilizer offtake sees a massive decline in recent months in the country.

As per data provided by the National Fertilizer Development Centre (NFDC), during October 2022, DAP offtake was 71,000 tonnes which decreased by 79.1% over October 2021.

“This decrease in offtake is due to heavy rains/floods and the high price of DAP fertilizer in the domestic market,” NFDC said.

Fauji Fertilizer Bin Qasim Limited is not the first country in Pakistan to take such a decision.

A number of companies representing different sectors have already either shut down or have limited their operations citing a drop in demand.

Kohinoor Spinning Mills Limited (KOSM), a manufacturer and exporter of yarn and cloth, and stitched fabric has decided to temporarily close its production facility, citing prevailing global and economic downturn, overdue plant maintenance, high cost of production and low demand.

On the other hand, the management of Baluchistan Wheels Limited (BWHL) also decided to temporarily close or stop production activity due to depressed demand for autos in the market.

last week Indus Motor Company (IMC) also announced that it will completely shut down its production plant from December 20 to December 30, citing its struggle with delays pertaining to approval for imports.