Report Industry Investment Rating No relevant content provided. Core Views - In Q3, urea prices were boosted multiple times by domestic anti - involution measures, urea export quota news, and the friendly relationship between China and India. After the domestic positive news was realized, domestic demand was weak, prices declined successively, and the spot decline was greater than the futures decline, gradually turning into futures premium [5]. - In the context of loose supply and demand, urea remains in a weak - running state. The spot price may remain oscillating at a low level around 1,500 - 1,700 yuan/ton. A negative feedback mechanism may form where low prices attract orders, but downstream buyers' "buy - on - rising" behavior leads to sporadic downstream demand. For the futures market, the 01 contract should pay short - term attention to the pressure level around 1,730 yuan/ton, and the 05 contract should focus on the 1,750/1,770 yuan/ton pressure levels. It is expected to mainly sell on rebounds in Q4 [6]. - On the supply side, affected by technological transformation in Shanxi and parade - related maintenance in Q3, urea production decreased quarter - on - quarter. However, with subsequent capacity expansion and the resumption of factory operations, it is expected that after the production recovers, the daily urea output will still fluctuate around 190,000 - 200,000 tons. In Q4 2025, production is expected to be higher than the same period last year due to high - level capacity [6][52]. - On the demand side, since Q3, the demand for autumn fertilizers has been realized, and the operating rate of compound fertilizer plants has rebounded but remained at the same level as previous years, without bringing new urea demand. Currently, most of the autumn fertilizers have been stocked, and the factory operating rate has declined to digest high - level inventories. Industrial demand is relatively sluggish. Although the consumption of thermal power denitration and vehicle urea has increased by about 8% this year, weak real - estate data has dragged down the expansion of urea industrial demand. Although the export policy has been relaxed, the export quota is far less than the surplus in urea supply and demand, making it difficult to fundamentally reverse the loose supply - demand pattern [6]. Summaries by Directory Q3 Market Review - Urea prices in Q3 showed a complex trend. Initially, prices were affected by factors such as gas - head device复产, changes in downstream factory operating rates, and export news, resulting in fluctuations including price drops, rebounds, and high - level consolidations. Eventually, after the export positive news was realized, domestic demand was insufficient, and the market was under pressure to decline due to oversupply [9]. - Due to continued capacity expansion and high - level inventory, urea prices have been lower year - on - year this year and are currently at the lowest level in the same period. It is expected to fluctuate between 1,500 - 1,700 yuan/ton in Q4. After the price fell below 1,600 yuan/ton, downstream buyers started to increase purchases as the futures price rebounded. However, domestic demand is expected to weaken after the National Day holiday, and a negative feedback mechanism may form [21]. - In terms of the term structure, urea maintains a contango structure with near - term weakness and long - term strength. The 1 - 5 spread remains in a discount state. With insufficient domestic demand and continuous inventory accumulation in the industry, the 01 contract oscillates at a low level. It is expected that the 1 - 5 spread will continue to be weak, and attention should be paid to reverse - spread opportunities [27]. - Currently, the basis is low, and the market is in a futures premium stage, suitable for selling hedging. After the basis strengthens, hedging supplies may enter the market, increasing market liquidity. The overall basis fluctuation is small, and it is expected to oscillate with a small amplitude in Q4 [37]. - According to Zhengshang Institute data, the settlement price of the 09 contract was 1,643 yuan/ton, with a 17 - yuan/ton premium for Henan spot and a 37 - yuan/ton premium for Hebei spot. The delivery volume of the UR2509 contract was about 4,274 lots, and the nominal delivery volume was about 85,480 tons, an increase of 3,204 lots compared to the 09 contract last year. The significant increase in futures delivery volume and registered warehouse receipts shows the loose market pattern of urea this year [41]. Supply Analysis - As of now, 3.12 million tons of new urea capacity have been put into operation in 2025, and another 3.56 million tons are expected to be commissioned in Q4. Although some backward capacity is being phased out, the overall capacity is still increasing [47]. - From January to August 2025, the cumulative urea production was about 47.4467 million tons, a year - on - year increase of 4.2092 million tons (+9.74%). Affected by technological transformation in Shanxi and parade - related maintenance in Q3, production decreased quarter - on - quarter. After subsequent capacity expansion and factory resumption, daily production is expected to fluctuate around 190,000 - 200,000 tons. In Q4 2025, production is expected to be higher than the same period last year [52]. - According to Longzhong's statistics, about 63.8 million tons of capacity within a 20 - year operating cycle account for 84% of the total capacity. The impact of anti - involution measures on urea production is limited. Although coal prices have increased significantly due to anti - involution, coal - based enterprises still have profits, so the impact on urea is currently small. However, if coal prices continue to rise or urea prices fall, cost support may emerge [56][60]. - As of September 25, the gross profit of fixed - bed urea production dropped to - 247 yuan/ton, and that of natural - gas - based production dropped to - 225 yuan/ton, while the water - coal - slurry production still had positive gross profit. The probability of large - scale production cuts by natural - gas - based enterprises is low due to long - term contracts with upstream suppliers [60]. - Historically, the urea price in the Shandong market was previously benchmarked against the fixed - bed production cost, and a rebound was likely when approaching the cost line. Since July 2024, the spot market price has gradually moved towards the water - coal - slurry cost, and currently, the cost support of water - coal - slurry is weak [65]. Demand Analysis - In terms of demand structure, agricultural demand is the most important, accounting for about 49%, and compound fertilizer demand accounts for about 25%, with the combined proportion close to 75% [74]. - It is estimated that the wheat sowing area in China in 2025 will be 355 million mu, a slight increase of 0.3% from the previous year. The corn sowing area will be about 44.269 million hectares, with a production of 298 million tons and a yield of 6,733 kg/ha, increasing by 1.08%, 2.76%, and 3.87% respectively compared to the previous year. The agricultural demand for urea is expected to increase steadily by about 5% in 2025 [78]. - The 2024 - 2026 national fertilizer commercial reserve project bidding document has adjusted the off - season storage rules. The proportion of urea in the reserve fertilizer has been reduced from not less than 30% to not less than 20%, and the single - target quantity in some provinces has been adjusted. The off - season storage enthusiasm is expected to increase this year, and the preparation time may be earlier and more dispersed than last year [80]. - Since July, the urea price has been oscillating downward, and the spread between compound fertilizer and urea has widened, leading to a recovery in factory profits. However, due to pre - emptive demand in the first half of the year and high finished - product inventories, factories are currently focusing on inventory digestion, and there has been no significant increase in the operating rate [85]. - As of September 26, the operating rate of compound fertilizer plants was 35.27%, with an average operating rate of 40% this year. After the demand was pre - empted in the first half of the year, the operating rate has been insufficient. Although the demand for autumn fertilizers has been realized in Q3, it has not brought new urea demand. Currently, most of the autumn fertilizers have been stocked, and the factory operating rate has declined [90]. - Other industrial demands include urea - formaldehyde resin, melamine, vehicle urea, and thermal power denitration. The consumption of thermal power denitration and vehicle urea has increased by about 8% this year. However, the real - estate market has been under pressure in 2025, with a 12.9% year - on - year decline in real - estate development investment and declines in new construction, construction, and completion areas, which has dragged down the expansion of urea industrial demand [94]. - As of September 26, the capacity utilization rate of China's melamine was 60.58%, and the average operating rate from January to September was 62%, flat year - on - year. Since August, the operating rate has been lower year - on - year. With the improvement of downstream demand and the resumption of previously - maintained factories, the demand for urea from melamine is expected to improve marginally [98]. - In 2025, the urea export policy has been relaxed, and domestic prices have been boosted multiple times since Q3. However, the export quota is far less than the surplus in supply and demand, making it difficult to fundamentally reverse the loose supply - demand pattern. As the export window closes, the boost from exports is expected to fade [104]. Inventory - As of September 25, the total inventory of urea enterprises was 1218,200 tons, a year - on - year increase of 204,300 tons. The in - factory inventory is at a relatively high level in the same period of the past five years, about 20% higher year - on - year. Since April, the in - factory inventory has been oscillating upwards. With high production and insufficient domestic demand, inventory has continued to accumulate even with the gradual opening of exports. It is expected that the inventory will continue to increase as there is no large - scale procurement demand for autumn fertilizers and the off - season storage is approaching [112]. - Since Q3, the number of days of pending orders for upstream urea factories has been higher year - on - year, mainly supported by export orders. As the export window closes, the shipment pressure of upstream factories may increase [112]. - India's urea inventory is currently at a relatively low level in recent years, and 6 - 9 months account for 70% of its annual demand. India has issued multiple tenders in Q3. The latest tender prices are lower than expected, and the domestic market has not been boosted, with the expected Chinese participation volume around 500,000 - 700,000 tons [114][116]. Supply - Demand Balance Sheet - The report provides a supply - demand balance sheet for urea from 2019 - 2025E, showing the production, export, various demand components, total domestic demand, and surplus volume in each year. In 2025E, the production is expected to be 69.76 million tons, exports 4 million tons, and the surplus is 130,000 tons [118].
尿素2025年四季报：内需低迷，难以消化高位库存
Guan Tong Qi Huo·2025-09-29 08:26