Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View The report suggests paying attention to the opportunity of buying low on the 01 contract of urea futures. Although the current domestic situation is one of strong supply and weak demand, from a valuation perspective, the current urea price is oscillating at a low level, and upstream profits are also relatively low, so the urea valuation is not high. Looking at the driving factors, there are two possible upward drivers for the urea price in the second half of the year: on the supply side, there is an expectation of renovation of old - fashioned plants, with about 20% of urea plants being over 20 years old and the current comprehensive operating rate above 80% with limited idle capacity; on the demand side, there is an expectation of improved exports, especially in September - October, given the easing of Sino - Indian relations [1]. 3. Summary by Relevant Content 3.1 Urea Futures and Spot Prices - **Futures Prices**: On September 4, UR01 closed at 1,714 yuan/ton with no change; UR05 was at 1,753 yuan/ton, down 4 yuan/ton (-0.23%); UR09 was at 1,664 yuan/ton, up 6 yuan/ton (0.36%) [1]. - **Spot Prices**: In Shandong, the spot price was 1,700 yuan/ton, down 10 yuan/ton; in Shanxi, it was 1,610 yuan/ton with no change; in Henan, it was 1,710 yuan/ton, down 10 yuan/ton (-0.58%); in Hebei, it was 1,700 yuan/ton, down 20 yuan/ton (-1.16%); in the Northeast, it was 1,730 yuan/ton with no change; in Jiangsu, it was 1,710 yuan/ton, down 10 yuan/ton (-0.58%) [1]. - **Price Spreads**: The spread between Shandong spot and UR was -53 yuan/ton, down 6 yuan/ton; the 01 - 05 spread was -39 yuan/ton, up 4 yuan/ton [1]. 3.2 Upstream and Downstream Prices - **Upstream Costs**: The anthracite prices in Henan and Shanxi remained unchanged at 1,000 yuan/ton and 900 yuan/ton respectively [1]. - **Downstream Prices**: The price of compound fertilizer (45%S) in Shandong and Henan remained unchanged at 2,950 yuan/ton and 2,550 yuan/ton respectively. The melamine price in Shandong was 5,134 yuan/ton, down 32 yuan/ton (-0.62%), and in Jiangsu, it remained unchanged at 5,300 yuan/ton [1]. 3.3 Trading Information of the Main Contract On the previous trading day, the main contract 2601 of urea futures opened at 1,712 yuan/ton, reached a high of 1,718 yuan/ton, a low of 1,706 yuan/ton, closed at 1,714 yuan/ton, and had a settlement price of 1,713 yuan/ton. The trading volume was 260,100 tons, and the open interest was 234,351 lots [1].

Report Summary 1) Report Industry Investment Rating No information provided. 2) Core View of the Report The report recommends a strategy of buying on dips for urea futures. The current urea price is oscillating at a low level and its valuation is not high as upstream profits are relatively low. There are two potential upward drivers for urea prices in the second half of the year: on the supply side, there is an expectation of renovation of old urea production facilities (about 20% of the facilities are over 20 years old and the current comprehensive operating rate is over 80% with limited idle capacity); on the demand side, there is an expectation of improved exports, especially in September - October, considering the easing of China - India relations. Therefore, it is advisable to focus on the opportunity to buy on dips for the 01 contract [1]. 3) Summary by Relevant Catalogs Urea Futures Prices - UR01 in Shandong closed at 1737 yuan/ton on August 26, down 8 yuan/ton (-0.46%) from the previous day; UR05 closed at 1777 yuan/ton, down 12 yuan/ton (-0.67%); UR09 closed at 1703 yuan/ton, down 11 yuan/ton (-0.64%) [1]. Spot Prices - In the domestic market, prices in Shanxi, Henan, Hebei, and Jiangsu remained unchanged on August 26 compared to the previous day. The price in the Northeast dropped 20 yuan/ton (-1.14%) to 1730 yuan/ton [1]. Basis and Spreads - The basis of Shandong spot - UR increased by 12 yuan/ton to -77 yuan/ton; the 01 - 05 spread increased by 4 yuan/ton to -40 yuan/ton [1]. Upstream Costs - The prices of anthracite coal in Henan and Shanxi remained unchanged at 1000 yuan/ton and 900 yuan/ton respectively [1]. Downstream Prices - The prices of compound fertilizer (45%S) in Shandong and Henan, and the prices of melamine in Shandong and Jiangsu remained unchanged on August 26 compared to the previous day [1]. Important Information - On the previous trading day, the opening price of the main urea futures contract 2601 was 1741 yuan/ton, the highest was 1749 yuan/ton, the lowest was 1727 yuan/ton, the closing price was 1737 yuan/ton, and the settlement price was 1742 yuan/ton. The 2601 contract had a trading volume of 219,820 lots [1].

1. Report Industry Investment Rating - Not provided in the report 2. Core Viewpoints of the Report - The probability of an increase in urea production is high due to the resumption of previously shut - down devices and possible short - term corporate failures. Agricultural demand is gradually being released, while domestic industrial rigid demand is weakening. The operating load of domestic compound fertilizer enterprises may remain low. Geopolitical factors have driven up international prices, and export demand will continue to increase in the short term. Urea will accelerate the process of being shipped to ports this week, and with the advancement of agricultural demand, the amplitude of urea inventory reduction may increase. The UR2509 contract is recommended for short - term trading in the range of 1700 - 1770 [2] 3. Summary by Relevant Catalogs 3.1 Futures Market - The closing price of the Zhengzhou urea main contract is 1711 yuan/ton, down 19 yuan; the 9 - 1 spread is 25 yuan/ton, down 16 yuan. The main contract's open interest is 233,160 lots, an increase of 7,750 lots; the net position of the top 20 is - 4,628, a decrease of 7,246. The exchange warehouse receipts are 0, a decrease of 3,581 [2] 3.2现货市场 - In the domestic spot market, prices in Hebei, Henan, Jiangsu, Shandong, and Anhui have all declined, with Shandong seeing the largest drop of 70 yuan/ton. The main contract basis is 39 yuan/ton, down 51 yuan. FOB prices in the Baltic and Chinese main ports have increased, with increases of 15 dollars/ton and 17.5 dollars/ton respectively [2] 3.3 Industrial Situation - Port inventory is 29.5 million tons, an increase of 5 million tons; enterprise inventory is 113.6 million tons, a decrease of 4.11 million tons. The urea enterprise operating rate is 88.28%, an increase of 0.48%. The daily urea output is 204,400 tons, an increase of 2,500 tons. The urea export volume is 0, with no change. The monthly output is 6,293,230 tons, an increase of 448,150 tons [2] 3.4 Downstream Situation - The compound fertilizer operating rate is 31.82%, a decrease of 1.99%. The melamine operating rate is 64.32%, an increase of 0.55%. The weekly profit of compound fertilizer is 186 yuan/ton, an increase of 1 yuan; the weekly profit of melamine with externally - purchased urea is - 484 yuan/ton, a decrease of 194 yuan. The monthly output of compound fertilizer is 4.809 million tons, a decrease of 1.0417 million tons; the weekly output of melamine is 32,000 tons, an increase of 300 tons [2] 3.5 Industry News - As of June 18, the total inventory of Chinese urea enterprises was 113.60 million tons, a decrease of 4.11 million tons from the previous week, a 3.49% decrease. As of June 19, the sample inventory of Chinese urea ports was 29.5 million tons, an increase of 5 million tons, a 20.41% increase. As of June 19, the output of Chinese urea production enterprises was 1.4307 million tons, an increase of 175,000 tons from the previous period, a 1.24% increase; the capacity utilization rate was 88.28%, an increase of 0.48% from the previous period, with the trend changing from decreasing to increasing [2] 3.6提示关注 - Pay attention to Longzhong enterprise inventory, port inventory, daily output, and operating rate on Thursday [2]

Report Summary 1. Report Industry Investment Rating No information provided. 2. Core View of the Report The report believes that the decline space of urea is limited, and it recommends going long on urea on dips. The main reasons are that urea exports may gradually be liberalized, and the export profit is considerable due to the large price difference between domestic and foreign markets. Additionally, domestic agricultural demand provides support as the peak season for top - dressing of crops like corn is coming, and inventory pressure has significantly reduced, making a sharp decline in urea prices unlikely [1]. 3. Summary by Relevant Catalogs 3.1 Price Changes - **Urea Futures Prices**: On May 19, compared with May 16, UR01 decreased by 17 yuan/ton, UR05 in Shandong decreased by 19 yuan/ton (-0.95%), UR05 in Shanxi decreased by 30 yuan/ton (-1.03%), UR09 decreased by 30 yuan/ton (-1.60%), and another price decreased by 50 yuan/ton (-2.75%) [1]. - **Domestic Spot Prices (Small - Granule)**: In Henan, it decreased by 10 yuan/ton (-0.52%); in Hebei, it decreased by 30 yuan/ton (-1.55%); in Northeast China, there was no change; in Jiangsu, it decreased by 10 yuan/ton (-0.52%) [1]. - **Spread and Price Difference**: The spread between Shandong spot and UR decreased by 11 yuan/ton, and the 01 - 05 spread increased by 2 yuan/ton [1]. - **Upstream Costs**: The prices of anthracite coal in Henan and Shanxi remained unchanged [1]. - **Downstream Prices**: The prices of compound fertilizer (45%S) in Shandong and Henan, and the prices of melamine in Shandong and Jiangsu remained unchanged [1]. 3.2 Important Information On the previous trading day, the opening price of the main urea futures contract 2509 was 1858 yuan/ton, the highest price was 1864 yuan/ton, the lowest price was 1835 yuan/ton, the closing price was 1847 yuan/ton, the settlement price was 1847 yuan/ton, and the position was 221735 lots [1]. 3.3 Trading Strategy The strategy is to go long on dips. However, it should be noted that if the price rises too fast in the short term, policies may change again [1].