July 28 International Fertilizer and Agriculture News

Pakistan Cuts DAP Purchases in June, Inventories Rise

Pakistan’s DAP inventories increased by 48,000 tonnes in June to 268,000 tonnes, the strongest month-on-month increase since January, as domestic demand remained poor. According to data from research agency NFDC, domestic production slowed to 52,000 tonnes last month but still exceeded demand. The arrival of 45,000 tonnes of Saudi Arabian DAP in the second half of the month further increased inventories.

Domestic demand fell to its lowest level since January, at 48,000 tonnes, during a period that would normally bring a seasonal sales boost. This figure was below the June 2021-25 average of 122,000 tonnes, as farmers considered DAP unaffordable. Since the first half of May, ex-Karachi prices have remained above the low end of PKR 15,000 per 50 kg bag. This is higher than levels in recent years and also above the threshold at which importers warned demand would be damaged and substituted by SSP and 18-20 “nitrophos.”

New imports are unlikely for the remainder of this quarter ahead of the high-volume wheat application season in October-November, as distributors remain pessimistic about domestic procurement this year. The continued closure of the Strait of Hormuz and escalating tensions at the Bab el-Mandeb Strait at the mouth of the Red Sea support the price outlook for DAP in the coming months. The possible emergence of DAP demand from Bangladesh, and especially India, would further tighten supply and keep prices high.

This means global DAP levels are unlikely to fall to a point that allows sales margins in Pakistan’s domestic market. Meanwhile, suppliers are trying to raise domestic DAP prices while avoiding pushing farmers away from purchases. Supplier consensus for total DAP offtake in 2026 is that market demand will not exceed 1 million tonnes, which would be about 35% below the 2021-25 annual average. Fourth-quarter reductions will be concentrated in the peak season.

The government also stopped supporting wheat procurement last year. Although there had been hopes for a domestic subsidy program, there is no guarantee that the government will have enough revenue to support the industry. Despite limited demand, Fauji Group said it will maintain DAP production near capacity for the rest of the year. This leaves little room for private-sector importers to bring in new DAP, although some of them have low inventories. As a result, Pakistan is expected to largely exit the international market for the remainder of the year.

U.S. Threatens New Tariffs on the EU

President Donald Trump’s administration has threatened to impose new tariffs on U.S. imports from the European Union, just one month after the European Parliament approved the economic bloc’s trade agreement with the U.S.

“The European Union is at it again, and as usual, directly targeting great American companies,” Trump said on social media. The Office of the U.S. Trade Representative complained that the European Commission had just fined Google $1 billion, following similar antitrust actions against other U.S. technology giants.

Trump posted that the U.S. will launch a Section 301 investigation into the EU’s “robbery” of American companies and, by extension, U.S. taxpayers. The U.S. has just imposed a 10% tariff on EU imports following a Section 301 investigation under the Trade Expansion Act, involving allegations that Europe lacked due diligence in banning imports of products made with forced labor from third countries.

Another Section 301 investigation targeting the EU is underway, involving “structural excess manufacturing capacity and production.” Last year’s U.S.-EU trade agreement capped potential punitive tariffs on imports from the European bloc at 15%.

Earlier this month, Trump said he would cut off all trade with EU member Spain because Spain did not support U.S. war efforts against Iran, but he did not follow through on the threat. The EU delegation in Washington did not immediately comment on Trump’s threat. On Thursday, the European Commission emphasized the benefits of the U.S.-EU agreement signed nearly a year ago, noting that EU companies had reached deals worth EUR 230 billion ($262 billion) in energy resources with U.S. exporters over the past year.

The EU has avoided taking equivalent retaliatory measures against Trump’s tariffs in order to preserve cooperation on defense and arms sales for Ukraine.