Report Summary 1. Report Industry Investment Rating No information provided regarding the industry investment rating. 2. Core View The report believes that current urea is undervalued, but the upward driving force is temporarily limited. It is recommended to sell out - of - the - money put options to earn time value. The current urea valuation is relatively low, reflecting the situation of strong supply and weak demand. The spot price in Shanxi has reached a near - five - year low and stabilized. Upstream enterprises are already suffering losses, and further price drops may reduce upstream production willingness. In the short term, the upward driving force is insufficient due to large supply and inventory pressure, and downstream buyers mainly replenish stocks cautiously at low prices. The potential driving forces to watch are the renovation of old chemical equipment on the supply side and the issuance of new export quotas [1]. 3. Summary by Related Catalogs Urea Futures and Spot Prices - **Futures Prices**: On October 21, UR01 closed at 1609 yuan/ton (up 9 yuan or 0.56% from the previous day), UR05 at 1682 yuan/ton (up 7 yuan or 0.42%), and UR09 at 1719 yuan/ton (up 11 yuan or 0.64%) [1]. - **Spot Prices**: In domestic markets, prices in Shandong, Henan and Jiangsu decreased by 10 yuan/ton (-0.65%, -0.65% and -0.64% respectively), and in the Northeast by 20 yuan/ton (-1.23%), while the price in Hebei remained unchanged [1]. Basis and Spread - The basis of Shandong spot - UR was -142 yuan/ton on October 21, down 17 yuan from the previous day. The 01 - 05 spread was -73 yuan/ton, up 2 yuan [1]. Upstream and Downstream Prices - **Upstream**: The prices of anthracite coal in Henan and Shanxi remained unchanged at 1030 yuan/ton and 880 yuan/ton respectively [1]. - **Downstream**: The prices of compound fertilizer (45%S) in Shandong and Henan, and melamine in Shandong and Jiangsu all remained unchanged [1]. Important Information The opening price of the main urea futures contract 2601 was 1597 yuan/ton, the highest was 1622 yuan/ton, the lowest was 1596 yuan/ton, the closing price was 1609 yuan/ton, and the settlement price was 1611 yuan/ton. The position volume was 312,167 lots [1]. Trading Strategy Sell out - of - the - money put options [1].