Core Viewpoint - The domestic fertilizer industry is facing intensified competition, leading to a significant decline in urea prices and increased losses for companies due to oversupply and weak demand [1][2][4][6]. Group 1: Market Conditions - Urea prices in North China fell below 1600 RMB per ton in September, with further declines observed post-National Day, reaching 1500-1570 RMB in Shandong and 1490-1520 RMB in Shanxi, marking over a 20% year-on-year drop [1][2]. - The overall urea production capacity in China is projected to reach 7900 million tons by the end of the year, with an expected oversupply of 5-6 million tons [2][6]. - The agricultural demand for urea is limited, with a decrease in summer grain planting area and a slowdown in industrial demand due to the real estate sector's downturn [2][3]. Group 2: Supply and Inventory - The operating rate of urea enterprises is approximately 82.39%, down 3.64 percentage points year-on-year, with a significant increase in urea inventory, reaching 145.98 million tons as of October 5 [4][5]. - The market sentiment remains bearish, with downstream purchasing activity low and a lack of strong demand leading to continuous price declines [3][4]. Group 3: Export Policies - The National Development and Reform Commission has adjusted fertilizer export policies, allowing for a total of 450 million tons to be exported by the end of September, but the allocation of export quotas has favored storage enterprises over production companies [6][7]. - Companies have suggested optimizing the export quota distribution to increase the share for production enterprises and dynamically adjusting export policies based on market conditions [7].

Core Insights - The domestic fertilizer industry is facing intensified competition, leading to a decline in product prices and increased losses for companies [2][3][5] - Urea prices have dropped significantly, with prices in key production areas falling below cost levels, exacerbating financial difficulties for producers [2][5] - The supply-demand imbalance is expected to persist, with significant new production capacity coming online while agricultural demand remains weak [3][4][7] Group 1: Market Conditions - Urea prices in September fell below 1600 yuan per ton, with further declines observed in October, reaching as low as 1490-1570 yuan in Shandong and Shanxi [2][3] - The total urea production capacity is projected to reach 7900 million tons by the end of the year, with a surplus of 500-600 million tons expected [3][7] - Agricultural demand is limited, with a decrease in summer grain planting area and reduced demand from the industrial sector, particularly in melamine production [3][4] Group 2: Production and Inventory - The operating rate of urea enterprises is approximately 82.39%, down 3.64 percentage points year-on-year, with coal-based urea plants operating at 81.73% [5][6] - National urea inventory has remained above 1 million tons, with a reported inventory of 145.98 million tons as of October 5, nearly double compared to the same period last year [5][6] - The production of melamine has been affected by the sluggish real estate market, leading to reduced orders and further pressure on urea demand [3][4] Group 3: Export Policies - The National Development and Reform Commission has adjusted fertilizer export policies, allowing for limited exports while prioritizing domestic supply [7][8] - Despite a significant price gap between domestic and international urea prices, the export quotas allocated to production enterprises are insufficient to alleviate losses [7][8] - Recommendations have been made to optimize export quota distribution, suggesting an increase in export volumes to 8-9 million tons by 2026 and a higher allocation for production enterprises [8]