ISLAMABAD: International prices for diammonium phosphate (DAP) have jumped 18% since the start of the US-Iran conflict, climbing to $840 per ton from $710 per ton and driving up fertilizer costs worldwide, according to market data.
Recent shipments booked by Pakistani companies were secured at $950 per ton, a price point that has transmitted directly into the domestic market, where DAP now retails at approximately 16,000 rupees per bag.
Domestic inventories stood at about 203,000 metric tons heading into May, reflecting a modest drawdown amid an absence of April imports and stable local production, an analyst at JS Global Capital said.
However, demand has weakened after a strong first quarter, with April offtake declining sharply due to seasonal slowdown and affordability pressures. Industry sources say suppliers are releasing limited DAP volumes.
Dealers may be holding inventory in anticipation of further price increases, with market expectations pointing toward DAP prices near 17,000 rupees per bag amid sustained strength in global markets.
Near-term supply visibility is expected to improve with June 2026 import arrivals, helping stabilize domestic availability after recent disruptions linked to geopolitical tensions along key shipping routes. A DAP cargo from Saudi Arabia is also expected soon.
On the domestic side, the government’s 24% increase in natural gas allocation to Fauji Fertilizer Company is likely to sustain higher production levels, partially offsetting import dependence. However, stability depends on uninterrupted gas supply and timely inflows.
With the Kharif sowing season underway, authorities have intensified enforcement of company-fixed maximum retail prices to ensure fertilizer availability and curb excessive pricing. Trading activity has slowed materially since DAP prices crossed 15,000 rupees per bag ex-Karachi, with elevated prices pressuring farmer affordability.
Analysts expect lower phosphate application rates and greater substitution toward cheaper alternatives, potentially leading to meaningful DAP demand destruction during 2026. Reduced nutrient application could weaken soil nutrient balance and adversely affect crop yields, increasing food security risks.
Rising input costs, including energy, transport and financing, continue to pressure farmer economics, limiting balanced fertilizer use and weighing on crop productivity.
