1. Report's Investment Rating No investment rating for the industry is provided in the report. 2. Core Viewpoints - The downside space for urea is limited, with support at the [1600] price level. The reasons include the recent maintenance of domestic gas - based plants leading to a decline in daily production on a month - on - month basis, but high levels of production and operation rates on a year - on - year basis; domestic demand is mainly for off - season storage, and industrial compound fertilizer production is in a transition period with a month - on - month improvement in demand; and cost support has slightly increased. The cost support for urea is around 1500 - 1550. With the issuance of the fourth batch of export quotas, expected to be around 600,000 tons, the specific export volume in the later stage should be monitored. Overall, with off - season storage and export regulation, the downward drive for urea is limited, and it should be treated with a sideways view [3]. - In 2026, the domestic urea market is expected to maintain a pattern of loose supply and demand and continuous inventory accumulation, with the overall supply - demand pressure potentially intensifying. Cost support and export policies will be the key factors of concern. The disk pricing is expected to follow the fundamental logic. The peak agricultural demand season may drive the price to rise periodically, and the price will face pressure to decline after entering the off - season, but the cost of the production process will form a bottom support, and exports will adjust the supply - demand balance through quota regulation. It is recommended to focus on seasonal market trends and grasp the rhythm [9]. 3. Summary by Directory Urea Trend Review - In 2025, the urea price showed a wide - range volatile trend of rising first and then falling. In the first half of the year, the price fluctuated upwards due to domestic spring - plowing demand and export expectations, but the pressure of oversupply on the supply side gradually emerged. In the second half of the year, affected by the off - season of agricultural demand and the realization of export expectations, the price center continued to move down. The market can be divided into several stages: from mid - January, with the approach of the Spring Festival holiday, manufacturers' advance orders started, and spot transactions improved; after the Lantern Festival, spring - plowing demand gradually started, and the inventory of urea enterprises decreased rapidly; from mid - June, due to the geopolitical conflict in the Middle East, the international urea price rose, which had an impact on the domestic market; from mid - August, due to the weakening of domestic demand and environmental protection policies, the urea price accelerated its decline; from mid - October, with the warming of market trading, the reserve demand increased, and the price gradually rose [16][17]. Urea Supply Side New Capacity Situation - Domestic urea capacity has entered a new expansion cycle in recent years. As of now, coal - based production still dominates, accounting for over 70%, with the proportion of anthracite - based plants decreasing to about 20% and bituminous - coal - based plants increasing to about 55% [30][31]. - In 2025, without considering capacity exit, about 5.44 million tons of new capacity were put into production according to the plan, mainly from factory expansions and upgrades. In 2026, the domestic urea industry is still in the production cycle, with an estimated new production plan of 5.95 million tons and a capacity growth rate of over 7% [36][40]. - Globally, the urea capacity is expected to maintain a growth pattern in 2026, but the growth rate will slow down. The global urea capacity is expected to reach 247 million tons, with a year - on - year increase of about 0.78% [46]. Production and Operation - In 2025, domestic urea supply remained high due to high capacity and operation rates. The daily production reached over 1.9 million tons in the first quarter, with a peak exceeding 2 million tons. In the second quarter, the daily production continued to rise, remaining above 2 million tons for a long time. In the third quarter, due to high temperatures and frequent equipment failures and maintenance, the daily production decreased to the 1.8 - 1.9 million tons range, but rebounded in September. In the fourth quarter, affected by equipment maintenance and gas restrictions for enterprises in the northwest and southwest, the domestic supply showed a seasonal decline. The overall production in 2025 is expected to reach about 71 million tons, with a year - on - year increase of nearly 7.9%. In 2026, if no backward capacity exits or policy adjustments occur, the national urea production is expected to reach 74 - 75 million tons, with a year - on - year growth rate of over 5% [60]. Urea Export - In 2025, the cumulative urea export volume from January to October was 4.01 million tons, with a significant year - on - year increase. The total annual quota was about 4.6 million tons, distributed in four batches. The export destinations were relatively scattered, with the Americas being the main destination before August, and the proportion of exports to Southeast Asia increasing significantly after September - October [69]. - In 2025, India had 8 urea import tenders, with a transaction volume of about 9.18 million tons, a significant increase compared to the same period in 2024. It is estimated that India's domestic urea production in 2025 was about 29.8 million tons, a year - on - year decrease of about 3.56%, and the import volume was about 10.2 million tons, a year - on - year increase of about 92.82%. In 2026, assuming normal production in India, it is estimated that India will need to import about 8 million tons of urea to maintain domestic supply - demand balance [70]. - For 2026, the export volume of domestic urea still depends on policy guidance. It is expected that exports will still be concentrated in the third and fourth quarters. If the export quota increases, the domestic supply pressure may be relieved; otherwise, the supply pressure will be more severe [65]. Urea Demand Substitute Demand - Synthetic ammonia, as an intermediate product of urea production, is still mainly used for urea production due to the relatively high price difference between urea and synthetic ammonia, and the external sales volume has not increased significantly [107]. - Urea has a cost - performance advantage compared to phosphate and potash fertilizers. The production and export volumes of ammonium sulfate and ammonium chloride have increased significantly in 2025, and the supply - demand pattern of nitrogen fertilizers has become looser, with the price ratio of urea to other fertilizers at a relatively high level [115][141]. Agricultural Demand - Urea agricultural demand is seasonal and rigid. The peak demand season is from March to May, and from June to July, the demand for field crops such as rice and corn is high. After August, it enters the off - season. In 2025, the domestic urea agricultural demand consumption was about 29.48 million tons, with a year - on - year growth rate of about 2.11%, but the growth rate slowed down compared to previous years. In 2026, the growth rate of urea agricultural demand is expected to further slow down [148][161]. Compound Fertilizer Demand - Compound fertilizer accounts for 15% - 20% of the downstream demand for urea. In 2025, the compound fertilizer production was expected to be 58.5 million tons, a year - on - year increase of about 5.10%, but the average operation rate decreased by about 0.40%. In 2026, the over - supply pressure in the compound fertilizer industry will still exist, and the average operation rate may continue to decline, but the demand for urea will still maintain a growth trend [171]. Urea - Formaldehyde Resin Demand - Urea - formaldehyde resin accounts for about 20% of the downstream demand for urea. In 2025, the overall operation rate of formaldehyde increased slightly, and the export demand for panels maintained a growth trend, driving the demand for urea to maintain a small increase. It is estimated that the demand for urea from the urea - formaldehyde resin sector in 2025 was about 10.82 million tons, with a year - on - year growth rate of about 2.5% [170][172]. Melamine Demand - Melamine accounts for about 7% - 10% of the downstream demand for urea. In 2025, the total melamine production was expected to be about 1.52 million tons, a year - on - year decrease of 3.76%, and the demand for urea was about 4.56 million tons, a year - on - year decrease of 170,000 tons. In 2026, the demand for urea from melamine and urea - formaldehyde resin is expected to remain stable, with limited highlights [178]. Off - Season Storage Demand - The new "National Fertilizer Commercial Reserve Management Measures" for the 2024 - 2026 period has some differences compared to previous years, including a reduction in the urea storage ratio, a change in the requirements for individual targets, an extension of the storage period, an adjustment of the storage assessment indicators, and an extension of the release time [190]. Urea Inventory - Enterprise inventory has strong seasonality, usually decreasing in the first half of the year and increasing in the second half. In 2025, due to high supply pressure, the enterprise inventory was at a relatively high level throughout the year, and although there was some destocking in November, the absolute inventory level was still high [199]. - Port inventory is closely related to export policies. After the export quota was officially issued in May 2025, the port inventory increased in an orderly manner. From September to October, with the increase in actual exports, the port inventory decreased rapidly [199]. Urea Supply - Demand Balance Sheet - In 2026, the new production capacity of urea is expected to bring an incremental output of about 2 million tons. The annual output is estimated to be around 75 million tons, with a year - on - year increase of about 4 million tons and a growth rate of about 5.5%. - The export volume is estimated to be about 5.5 million tons, and the annual consumption is estimated to be about 68 million tons. The domestic urea supply - demand will remain in an oversupply pattern throughout the year, and the price will depend on the game between cost and exports [205].

Report Industry Investment Rating No relevant information provided. Core Viewpoints of the Report - In 2025, urea prices continued to oscillate and search for a bottom, with frequent rapid rebounds. Supply remained high, and production increased year - on - year. In 2026, supply is expected to grow further, with a potential 3.5% increase in capacity and a 3.5% increase in production, or 2 - 2.5% if prices fall. Agricultural demand is expected to rise by 2.67%. Domestic industrial demand may remain weak, with a 2% decline in melamine and urea - formaldehyde resin demand. Urea export policies may continue, but the stimulus from exports is weakening. Without unexpected export demand, urea prices will slowly decline until production shows negative feedback [3][6]. Summary by Relevant Catalogs 2025 Market Review - In 2025, urea prices oscillated downward. Key factors included continuous domestic capacity expansion (355 million tons in 2025, 317 million tons expected in 2026, and 600 million tons from 2027 - 2028), decent agricultural demand during peak seasons, changes in export policies, and stable industrial demand [12][14]. - Quarterly events included winter gas restrictions and rising international natural gas prices in Q3, which pushed up international nitrogen fertilizer prices. There were also factors such as spring plowing demand, changes in compound fertilizer export policies, and the start of summer demand [10]. Capacity Trends - China's urea is in a capacity expansion cycle. In 2025, net new capacity was 4.18 million tons, and 2.94 million tons are expected in 2026. Future plans involve adding about 14 million tons and removing 3 - 5 million tons in the next three years, resulting in a net increase of 9 - 11 million tons [19][24]. - Some fixed - bed processes using anthracite are being phased out, with about 13.61 million tons of such capacity (18% of the total) likely to be eliminated in the next five years [24]. Production and Profitability - In 2025, gas - based urea production was unprofitable, but production was not significantly affected due to planned gas supply and export quota support. However, long - term low prices may lead to reduced production [28]. - In 2026, urea production is expected to increase by 3.6%. But due to limited room for increasing the production rate and low prices for gas - based production, the increase in production may be less than the increase in capacity. If prices fall, output growth may drop to 2.3% [34][39]. Nitrogen Fertilizer Market - Production of nitrogen - containing fertilizers has grown rapidly in recent years. In 2025, synthetic ammonia production is expected to be 34.5% higher than in 2022. Urea remains cost - effective compared to other nitrogen fertilizers, but the substitution demand has decreased [49][53]. - Ammonium chloride and ammonium sulfate markets are moving towards a more balanced supply, with supply increasing and the substitution demand for urea limited. The substitution of ammonium sulfate for urea exports may weaken [54][60][62]. - Overall nitrogen fertilizer supply has increased significantly. In 2025, the total nitrogen - containing output of nitrogen fertilizers is expected to maintain a growth rate of over 10%. However, international nitrogen fertilizer prices have weakened, and future export momentum may decline [64][66]. Demand Trends - Agricultural demand is expected to continue to grow moderately. From 2020 - 2024, grain sowing area and production increased. Policies aim to increase grain production by 100 billion jin by 2030. In 2026, agricultural and other demand is expected to rise by 2.7%, and compound fertilizer demand may increase by 1.7% [70][82][85]. - Industrial demand is related to the real - estate market and furniture exports. With weak real - estate demand and falling furniture export prices, the demand for melamine and urea - formaldehyde resin is expected to decline by 2% in 2026 [88][97]. Export Situation - Export policies are crucial. Historically, policies have changed frequently. In 2025, export policies were relaxed through quotas, and exports may reach 4.76 million tons, with a possible increase to 5 million tons in 2026. India's import demand may decrease, while non - China and India regions are expected to add 4 million tons of new capacity in 2026. Export profit remains high, and the quota system is expected to continue in 2026 [102][111][113][116]. Balance Sheet - In 2026, domestic new capacity will continue to be put into operation. Without considering production cuts due to losses, urea production is expected to increase by about 2.54 million tons (3.7%). Demand is expected to see a 2.7% increase in agricultural and other sectors, a 1.7% increase in compound fertilizers, a 2% decrease in industrial demand, and stable or increasing exports. Overall, supply may slightly exceed demand, but there is still a possibility of short - term strength due to export policies [120][121].

1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - In 2026, the supply - side of urea will see accelerated release of new production capacity, with over 6.5 million tons of new capacity expected to be put into operation, increasing the total domestic urea production capacity to 87 million tons by the end of 2026, and the daily output is expected to exceed 225,000 tons and reach a record high of 230,000 tons [5][168]. - The agricultural demand for urea is expected to peak after the Spring Festival and before the first half of the year. Overall, agricultural demand is stable, industrial demand is weak, and exports may become a key marginal variable for demand. The increase in export quotas in 2026 compared to 2025 will be a crucial factor affecting the market rhythm [5][169]. 3. Summaries According to Relevant Catalogs 3.1 First Part: Preface Summary 3.1.1 Comprehensive Analysis - In 2026, on the supply - side, new urea production capacity will continue to be released rapidly. On the demand - side, agricultural demand has a seasonal peak, and exports are a key variable [5]. 3.1.2 Strategy Recommendation - Unilateral trading: Weak before the Spring Festival, strong in the first half of the year, and mainly weak in the second half, with export quotas affecting the market rhythm [6][169]. - Arbitrage: Short - term weakness in inter - period arbitrage, and long - term positive arbitrage opportunities after the Spring Festival [6][169]. - Options: The lower margin is between 1550 - 1600, and the upper margin is between 2100 - 2200 [6][170]. 3.2 Second Part: Fundamental Situation 3.2.1 Market Review - In 2025, the domestic mainstream urea ex - factory price showed an "N" shape. It bottomed out in January, rebounded around the Spring Festival, had short - term rebounds after the release of export quotas in April, and then declined due to weakened demand in July and rebounded again in October [11]. 3.2.2 Supply Analysis - China's urea production capacity entered a de - capacity cycle after peaking in 2015 and started positive growth in 2021 due to new capacity release [34]. - In 2025, the net increase in urea production capacity was 6.5 million tons, and in 2026, it is expected to be about 6.5 million tons, with a production capacity growth rate of 7.9% [37][42]. - In 2025, the average daily urea production reached a new high, and the average daily production in 2026 is expected to exceed 210,000 tons in the second quarter [47][70]. - In 2026, coal prices will fluctuate within a range, and urea production profits will be further compressed. Demand growth may slow down, and high inventory may become normal. Attention should be paid to the winter maintenance of gas - head enterprises [57][67][75]. 3.2.3 Demand Analysis - Agricultural demand accounts for about 70% of urea demand, with seasonal characteristics. In 2025, China's grain production increased, and the demand for high - standard farmland showed steady growth [80][90][100]. - The price of urea has a significant comparative advantage over phosphate and potash fertilizers [103]. - Internationally, the total urea production capacity is expanding. India still has a large demand gap, and China's export quotas are expected to increase in 2026, with international prices affecting the export rhythm [112][121][125]. - The 2025/26 off - season storage policy continues the 2024/25 policy, and it is worth noting whether the rewards and punishments are linked to export quotas [136][140]. - Industrial demand for urea, mainly from the melamine and urea - formaldehyde resin industries, is expected to remain lackluster in 2026 [141][151]. - In 2026, the production of compound fertilizers will first rise and then fall, with different demand characteristics in different seasons [155][161]. 3.3 Third Part: Market Outlook and Strategy Recommendation 3.3.1 Comprehensive Analysis - Similar to the preface, in 2026, the supply - side will see new capacity release, and the demand - side will be affected by agricultural seasons and export quotas [168][169]. 3.3.2 Strategy Recommendation - Unilateral trading: Weak before the Spring Festival, strong in the first half of the year, and mainly weak in the second half, with export quotas affecting the market rhythm [169]. - Arbitrage: Short - term weakness in inter - period arbitrage, and long - term positive arbitrage opportunities after the Spring Festival [169]. - Options: The lower margin is between 1550 - 1600, and the upper margin is between 2100 - 2200 [170].

1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints - In 2025, the high - end supply of urea suppressed its price increase, domestic demand determined the support level, and exports provided the driving force. The price showed a trend of rising first, then falling, and rising slightly at the end of the year. In 2026, due to new capacity, the supply side will still be under pressure. Exports are expected to continue to be released in the form of quotas. Agricultural demand may be advanced in the first half of the year, and the price is expected to be strong in the first half and decline in the second half, with an overall upward shift in the center of gravity [7]. - On the supply side, 5.87 million tons of new urea production capacity was put into operation in China in 2025, and 7.78 million tons are expected to be put into operation in 2026. Most of the new capacity is coal - based, and the coal - based production accounts for a high proportion. The total urea production from January to November 2025 was 65.057 million tons, a year - on - year increase of 7.82%. The coal price is expected to rise moderately in 2026, and attention should be paid to its impact on the cost support of urea [7]. - On the demand side, in terms of agricultural demand, the purchase of urea is expected to be advanced in 2026, and the total agricultural demand will maintain a year - on - year increase. The compound fertilizer factory has a high inventory, and raw material procurement is expected to be cautious. Other industrial demands related to real estate are expected to increase slightly. In terms of exports, the policy in 2026 is expected to be mainly relaxed, but in the first - half agricultural peak season, ensuring supply and stabilizing prices will be the main logic, and exports will be appropriately and limitedly liberalized [7]. 3. Summary by Directory Urea Market Review - In 2025, the urea market was affected by supply, domestic demand, and export news. The price showed a trend of rising first and then falling, with multiple pulse - like increases driven by export news. For example, in January, the market was weak due to insufficient domestic demand but rebounded due to export news; in February, the price rose due to the expectation of the spring plowing season; in May, the price declined due to the lower - than - expected export quota [12]. Urea Spot Price Trend - In 2025, the urea spot price showed a trend of rising first and then falling, and was lower than the previous year due to supply pressure. The Shandong spot price ranged from 1,550 yuan/ton to 1,900 yuan/ton. In 2026, if there is no significant change in export policy, the price is expected to continue to fluctuate at a low level [20]. Basis - The urea basis usually strengthens during the agricultural demand peak season and the reserve season and weakens during the off - season. In 2025, the annual fluctuation range was relatively small. Before June, the basis continued to strengthen, and then entered the agricultural off - season. The basis strengthened until the futures were at a premium, providing hedging opportunities for enterprises. During the winter storage period, the basis is expected to continue to strengthen, and attention should be paid to the entry opportunities of hedging goods [28]. Contango Structure - The contango structure of urea (near - term weak, long - term strong) is gradually flattening. Since the third quarter of 2025, the price of the 01 contract has continued to strengthen, and the 1 - 5 spread has weakened. With the arrival of the agricultural peak season in the coming year, the 5 - 9 spread is expected to gradually strengthen, and attention should be paid to positive spread arbitrage opportunities [33]. Urea Trading and Position - In 2025, the urea delivery volume increased significantly. From January to November, the delivery volume reached 25,700 lots, the highest in the same period in history. The addition of large - granular urea as an alternative delivery product deepened the service of futures to the real economy and facilitated the participation of upstream and downstream enterprises in delivery and futures business [39]. Supply Analysis Urea Production Capacity Investment - In 2025, 5.87 million tons of new urea production capacity was put into operation in China, and 7.78 million tons are expected to be put into operation in 2026. In the next five years, global new urea production capacity will mainly be concentrated in Latin America, Brazil, the United States, and India, with Australia adding 2 million tons [46]. Capacity Analysis - About 84% of the total production capacity has been in operation for less than 20 years. In recent years, most of the new production capacity uses the coal - water slurry process, and the fixed - bed and fluidized - bed processes are gradually being phased out. The anti - involution policy has promoted the optimization and technological upgrading of production capacity [54]. High - level Annual Production - From January to November 2025, the total urea production was 65.057 million tons, a year - on - year increase of 7.82%, and the capacity utilization rate was 84.64%, a year - on - year increase of 2.42%. The daily production was mostly around 190,000 - 200,000 tons. It is expected that the production capacity will resume in early 2026, increasing production [59]. Increasing Proportion of Coal - based Production - Seasonally, gas - based plants may reduce production in winter due to gas supply limitations, but the impact may be weakened by the increasing proportion of coal - based production. In 2025, the capacity utilization rate of gas - based plants was significantly lower than the previous year, while coal - based plants had more new investments and profits, with coal - based production accounting for about 76% [64][65]. Coal Price Trend - The production of coal - based urea is shifting from traditional high - quality anthracite to modern large - scale gasification using cheap lignite. The coal price in 2025 first decreased and then increased, and is expected to rise moderately in 2026 due to stricter policy regulation in the coking industry [72]. Natural Gas Price Trend - In 2025, the natural gas price fluctuated moderately and remained low and stable for two consecutive years due to sufficient supply and weak demand. The domestic natural gas production increased steadily, while the consumption growth rate slowed down [77]. Decent Profit of Coal - water Slurry Process - As of December 19, 2025, the profits of fixed - bed and gas - based urea production were negative, while the coal - water slurry process still had profits, but it was close to the cost line in November. The cost advantage of the coal - water slurry process will further expand the losses of fixed - bed and gas - based plants [81]. Unobvious Cost Support - Historically, the Shandong urea market price was initially benchmarked against the fixed - bed cost and later against the coal - water slurry cost. In 2025, the cost line support was weak, and the urea price mainly depended on fundamentals and export policies. With the expected increase in coal prices in 2026, attention should be paid to the cost support of urea [86]. Demand Analysis Overall Demand - Agricultural demand and compound fertilizer demand account for about 75% of the total urea demand [92]. Agricultural Demand - Urea agricultural demand is mainly concentrated in the first half of the year, with 4 - 5 months being the peak season. In 2025, due to the recovery of grain prices and low urea prices, the procurement of urea was advanced and dispersed. It is expected that the procurement will also be advanced in 2026. During the 14th Five - Year Plan period, the total agricultural demand will maintain a year - on - year increase due to the popularization of high - standard farmland and related technologies [97][99]. Compound Fertilizer Demand - In 2025, the production capacity of compound fertilizer plants continued to increase, and new capacity was characterized by technological upgrading and the expansion of leading enterprises. The production of compound fertilizers first decreased and then increased. In 2025, the cost of compound fertilizers was high, the price - difference with urea widened, and the demand for urea by compound fertilizer plants was advanced. It is expected that the demand will still be advanced in 2026 [106][121]. Real Estate - related Demand - In 2025, the real estate market was in a downturn, but the central government's economic work conference set the tone to stabilize the real estate market. It is expected that the real estate market will stop falling and stabilize in 2026 [129]. Melamine Demand - From January to November 2025, the melamine production decreased. Its demand for urea has obvious seasonal characteristics and is closely related to the real estate market. The export growth of melamine has slowed down, but China is still the world's largest producer and exporter [134]. Vehicle Urea Demand - With the advancement of emission standards, the demand for vehicle urea is increasing. Although the production and sales of diesel vehicles have declined, diesel trucks still dominate the market, and the demand for vehicle urea remains strong [139]. Thermal Power Denitrification Demand - With the replacement of new energy, the proportion of thermal power is gradually decreasing, and the demand for urea in thermal power denitrification has limited growth and is mainly stable [146]. Inventory - In 2025, the urea inventory was at a high level. Affected by the high - level supply and the advance of demand, the inventory decreased until April and then increased until December. With the support of winter storage and exports, the inventory began to decrease. It is expected that the inventory in 2026 will also start at a high level and show a seasonal "V" - shaped trend [151]. Export - In 2025, 4 batches of export quotas totaling about 4.6 million tons were issued, which repeatedly boosted the market but also caused price corrections after the release of positive news. It is expected that the export policy in 2026 will be mainly relaxed, and exports will be appropriately liberalized to solve the problem of oversupply during the non - agricultural peak season. The participation in Indian tenders has been low in recent years, and the export direction has shifted to Latin America and South America [155][157][158]. International Urea - In 2025, international urea prices were affected by gas restrictions in the Middle East and Indian tenders. There was a large price - difference between the domestic Shandong market price and the export price, and exports had large profits. The large - scale exports from China also put some pressure on international urea prices [163].