Fertiliser stocks in demand; surges up to 10%

Shares of fertiliser companies were in demand today, surging up to 10 per cent, after government approved a proposal to pool or average out prices of domestic natural gas and imported LNG used by fertiliser plants to make the cost of fuel uniform and affordable.
Zuari Agro Chemicals soared 10.13 per cent, Gujarat Narmada Valley Fertilizers & Chemicals surged 8.48 per cent and Chambal Fertilisers gained 6.96 per cent on the BSE.
Among others, Rashtriya Chemicals and Fertilizers was up 5.86 per cent, Gujarat State Fertilizers climbed 3.30 per cent and Deepak Fertilisers rose by 2.59 per cent.
"Investors lapped up shares of fertiliser companies after the Union Cabinet yesterday approved gas pooling for 30 urea manufacturing units in the country," said Aamir Mir, Senior Analyst, HBJ Capital.

The Cabinet Committee on Economic Affairs yesterday approved a proposal to pool or average out prices of domestic natural gas and imported LNG used by fertiliser plants to make the cost of fuel uniform and affordable.
Fertiliser plants consume about 42.25 million standard cubic meters per day of gas for manufacture of subsidised urea. Out of this, 26.50 mmscmd comes from domestic fields and the rest 15.75 mmscmd is imported liquefied natural gas (LNG). The USD 5.18 per million British thermal unit price of domestic gas is about half the cost of LNG.

Gas pooling will help save Rs 1,550 crore in subsidy and will benefit 30 urea plants, Telecom Minister Ravi Shankar Prasad said yesterday.

The cost of gas, which is the most important component for production of urea, varies from plant to plant owing to differential rates at which imported LNG is contracted as well as cost of transportation.
"Shares of fertiliser companies rallied today on the back of Cabinet approval to pool imported and domestic gas to give a boost to its production and lower the operational costs," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.