The disruption around the Strait of Hormuz is putting pressure on Pakistan’s fertilizer sector, with Fauji Fertilizer Company (FFC) and Fatima Fertilizer facing a sharper earnings squeeze than Engro Fertilizers.
Higher phosphoric acid costs are narrowing phosphate margins, while gas shortages are adding another layer of pressure for plants linked to RLNG. The impact is uneven across fertilizer companies, leaving FFC and Fatima more exposed while EFERT benefits from tighter urea supply.
Phosphate Costs Hit on Two Fronts
DAP makers now sit on primary margins near 10%, about five percentage points thinner than last year.
The same cost shock is bleeding into other phosphatic grades. Retail tags have already moved, with DAP around PKR 17,500 a bag and NP around PKR 10,500.
Farmers notice those numbers. Higher bag prices usually mean slower buying, rather than a sudden switch to a cheaper substitute.
NP is often discussed as a DAP stand-in. On phosphorus cost, however, it is not. Each kilo of phosphorus in DAP still works out cheaper than in NP.
That is why demand for both products tends to move together rather than replace each other. A four-year reading puts that link at a correlation of 0.64.
Offtake Is Set to Soften
If prices stay elevated, annual DAP demand is seen near 1.2 million tons, down about 10% year on year.
NP is projected around 0.7 million tons, down about 8%.
FFC is the heavy DAP seller in the monthly mix, so volume risk sits more on its books. Fatima carries NP and related phosphate exposure, along with a plant that has already lost running days.
That combination makes the squeeze feel company-specific rather than sector-wide.
Gas Shortages Add a Second Problem
Nitrogen has its own headache. RLNG-linked plants — including Fatima’s Sheikhupura unit, AGL Mianwali, and FFBL — stayed shut for about two months this year.
The estimated urea hole is around 150,000 tons. Spot urea has climbed to about PKR 4,650 a bag, versus roughly PKR 4,400 a year earlier.
That price lift is not all bad. Producers sitting on older, cheaper gas inventory can sell without the usual discounts.
Full-year urea offtake is still expected near 6.4 million tons. The winners are the plants that kept running and can release low-cost stock into a tighter market.
Earnings Impact Is Uneven
Gross margins for the rest of the year tell the split clearly.
EFERT is seen at 34.7%, up 4.1 percentage points. Fatima is seen at 38.9%, up 4.7 points. FFC is the flat one at 30.1%, down a tenth of a point.
The direct earnings hit from the regional conflict over the next five months of 2026 is estimated at PKR 3.0 a share for FFC and PKR 1.2 a share for Fatima.
EFERT is modelled for a PKR 2.1 gain over the same stretch. Urea pricing and inventory math are doing more work for Engro than phosphate costs are taking away.
If tensions last through year-end, the working EPS picture is about PKR 20.3 for EFERT, PKR 61.9 for FFC, and PKR 22.1 for Fatima.
A quicker resolution by end-September would flip that: FFC and Fatima would print higher, while EFERT would be a little lower. That second path is treated as the less likely one.
Why FFC and Fatima Face More Pressure
The FFC share impact and Fatima Fertilizer earnings outlook are being shaped by two different but connected pressures.
FFC has greater exposure to DAP volumes, making weaker phosphate demand a direct concern if elevated prices slow farmer offtake.
Fatima faces both phosphate exposure and operational pressure from RLNG-linked outages at its Sheikhupura plant. That gives the company an additional earnings risk beyond higher phosphoric acid prices.
EFERT, meanwhile, is positioned differently. The urea shortage created by gas-related plant shutdowns can support urea pricing and benefit producers that maintained operations and hold lower-cost inventory.
The Call Stays Cautious
None of the three is being painted as a loss-making business. All still show solid positive earnings.
The pressure is relative. FFC and Fatima absorb the phosphate shock and, in Fatima’s case, the RLNG outages. EFERT benefits more from the urea tightness those outages helped create.
The Pakistan fertilizer outlook therefore remains neutral until the Middle East situation is clearer.
For now, the simple reading is this: the Hormuz disruption did not hit every fertilizer name the same way.
It squeezed FFC and Fatima first.
What Could Change the Earnings Picture
The duration of the regional disruption will remain the key variable for fertilizer companies.
If tensions persist through year-end, the estimated earnings impact points to weaker results for FFC and Fatima, while EFERT could gain from tighter urea markets.
A quicker resolution by end-September would reverse part of that pressure, allowing FFC and Fatima to print higher earnings while leaving EFERT somewhat lower.
For investors, the key indicators are phosphoric acid prices, DAP and NP offtake, urea pricing, gas availability and the duration of the Hormuz-related disruption.
Until those variables settle, the sector view remains cautious rather than outright negative.