1. Report Industry Investment Rating No information provided in the document. 2. Core Viewpoints of the Report - The short - term trend of urea is more likely to decline than rise, but the downside space is limited, with support at the price of 1700. The reasons include an increase in planned maintenance of domestic devices, high production and operation rates year - on - year, a shift of domestic agricultural demand to the off - season, limited overall demand support from industrial compound fertilizers, a weakening cost support for urea moving down to around 1500 - 1600, and the implementation of export policies. Attention should be paid to the specific export volume later [3]. - Overall, the domestic urea supply remains high and the pressure is difficult to relieve. The demand has weakened compared with the previous period. The agricultural demand is gradually entering the off - season, and the demand for industrial compound fertilizers is at a low level. The overall demand support is relatively weak. However, the opening of the export channel may relieve the fundamental pressure and support the urea price, so it is expected to operate in a volatile manner [7]. 3. Summaries Based on Relevant Catalogs 3.1 Urea Fundamental Overview - **Cost - side Logic**: Recently, coal prices have risen slightly, but the coal - based production cost is at a low level. This week, the ex - factory price of urea has decreased, and the profit of coal - based urea has shrunk. The natural gas price in the southwest region has remained stable, and the profit of gas - based urea has been stable [6]. - **Supply - side Logic**: Recently, the number of domestic maintenance devices has increased, but it has little impact on the supply pattern. The domestic production volume remains high year - on - year, and the overall supply is loose [6]. - **Demand - side Logic**: In agriculture, the current demand is in the traditional off - season, with weak overall support. In industry, the operation rate of compound fertilizers has continued to increase, but downstream procurement is generally cautious, and other industrial demands maintain rigid procurement. In terms of exports, last week's meeting approved an export quota of 20 - 300,000 tons to India, but this quota is included in the first two batches, and there is no new third - batch export quota. The total export quota remains unchanged. From the current export inventory data, domestic exports are being carried out in an orderly manner [6]. 3.2 Urea Price Changes - **Urea Market Price**: This week, the domestic urea spot market has declined weakly, with the average price in the mainstream regions falling by about 50 yuan/ton compared with last week. The current market supply - demand pattern remains loose, the hype expectation for exports has faded, and there is a lack of new positive drivers. The bearish sentiment in the spot market is strong, and the downstream procurement psychological price continues to decline. Urea factories generally adopt a "price - for - volume" strategy, but high - priced goods have difficulty in trading [26]. - **Regional Price Differences**: This week, the regional price differences are within the normal range, which can be used to judge whether the regional logistics window is open [38]. - **Urea Spot Profit**: Recently, domestic coal prices have been mainly stable with partial narrow - range adjustments. The ex - factory price of urea has continued to decline, and the profit of coal - based urea has slightly narrowed. The price of natural gas under the agreement has been stable, and the profit of gas - based urea in the southwest region has remained stable [54]. - **Comparison with Other Fertilizers**: The current ratio of urea to ammonium chloride is at a relatively high level in the same period over the years, while the ratios to phosphate and potash fertilizers are at relatively low levels compared with previous years [65]. - **Overseas Prices and Price Differences**: China is a net exporter of urea. The theoretical export profit can be calculated based on the difference between overseas prices and domestic trade prices to judge the possibility of exports. The international urea price has generally decreased after the market digested the Indian tender, and it is expected to decline further in the future [70][80]. - **Price Differences and Calendar Spreads**: The 9 - 1 spread of urea has strengthened by 7 yuan/ton compared with last Friday. Due to the decline in the spot and futures prices this week, the basis has continued to weaken. For example, the basis of the 09 contract in Henan has weakened by 33 yuan/ton compared with last week [79]. 3.3 Urea Production, Sales, and Inventory - **Supply - Production and Operation**: This week, the domestic urea production volume is 134.86 million tons (Longzhong's data), an increase of 2.01 million tons compared with last week. The operation rate is 83.22%, an increase of 1.24% compared with last week. Among them, the operation rate of coal - based urea is 85.51%, and that of gas - based urea is 75.77%. The maintenance loss of domestic urea devices this week is 19.19 million tons, a decrease of 0.9 million tons compared with last week [94][101]. - **Demand - Agricultural Fertilization**: No specific and useful information about agricultural fertilization demand is provided in the document. - **Demand - Compound Fertilizers**: This week, the market price of compound fertilizers has been stable with partial slight stability. The operation rate has increased by 1.98% to 43.48%, and the inventory has increased by 2.61 million tons to 82.65 million tons [117]. - **Demand - Melamine**: This week, the production volume of melamine is 24,800 tons, a decrease of 5500 tons compared with last week. The operation rate is 49.82%, a decrease of 11.28% compared with last week. The domestic melamine market has continued to rise, supported by the reduction in supply. However, the demand is still weak, and the support from raw materials is limited [128]. - **Inventory**: This week, the enterprise inventory is 113.43 million tons (Longzhong's data), a decrease of 1.37 million tons compared with last week, and the port inventory is 39.8 million tons, an increase of 1.7 million tons compared with last week. According to Baichuan's data, the enterprise inventory and port inventory also show different trends [139].

1. Report Industry Investment Rating - The investment view on the urea industry is "oscillating", indicating that the short - term, medium - term, and long - term amplitudes are expected to be between - 5% and 5% [4][84] 2. Core View of the Report - The urea market is influenced by a mix of long and short factors. Macro - level factors, cost, and export prospects are positive, while domestic demand is negative. Therefore, the market is expected to oscillate [4] 3. Summary by Relevant Catalogs 3.1 Main Views and Strategy Overview - **Supply**: Urea production was 1.3285 million tons, a decrease of 26,300 tons (1.94% week - on - week). The weekly average daily production was 189,800 tons, a decrease of 3700 tons. The capacity utilization rate was 81.98%, a decrease of 1.62% week - on - week. Some provinces saw production and capacity utilization changes. Overall, the supply factor is neutral [4] - **Demand**: The urea demand of sample compound fertilizer production enterprises in Shandong Linyi was 930 tons, a decrease of 200 tons (17.70% week - on - week). The pre - received order days of Chinese urea enterprises were 6.53 days, an increase of 0.41 days (6.70% week - on - week). The demand factor is bearish [4] - **Inventory**: The port sample inventory was 483,000 tons, a decrease of 10,000 tons (2.03% week - on - week). The total enterprise inventory was 887,600 tons, a decrease of 29,700 tons (3.24% week - on - week). The inventory factor is neutral [4] - **Basis/Spread**: The UR spread had a narrow - range oscillation this week, and the factor is neutral [4] - **Profit**: The theoretical profit of urea sample enterprises had a narrow - range fluctuation. The theoretical profit of coal - fired fixed - bed process was - 167 yuan/ton (unchanged from last week), that of the new coal - water slurry process was 282 yuan/ton (a decrease of 50 yuan/ton from last week), and that of the gas - fired process was - 185 yuan/ton (unchanged from last week). The profit factor is bullish [4] - **Valuation**: The full cost of the fixed - bed process is about 1600 - 1700 yuan/ton, and that of the new coal gasification process is around 1400 - 1500 yuan/ton. The valuation factor is neutral [4] - **Macro and Policy**: There is an expectation of anti - involution policy, and the cost - side support is relatively strong. The macro and policy factor is bullish [4] - **Trading Strategy**: For single - side trading, it is recommended to wait and see; for arbitrage, also wait and see [4] 3.2 Futures and Spot Market Review - The domestic urea market first rose and then declined this week. The mainstream ex - factory price of small and medium - sized particles in Shandong dropped to 1740 - 1780 yuan/ton, with the average price decreasing by 5 yuan/ton week - on - week. After the export policy was announced, the market trading sentiment cooled down, and the short - term market may decline slightly again [6] 3.3 Urea Supply - Demand Fundamental Data - **Supply Data**: The report presents data on daily urea production, weekly production of large and small particles, production from coal and natural gas sources, and the capacity utilization rate over multiple years [28][30] - **Downstream Agricultural Demand**: Data on corn, wheat, and rice prices, as well as pre - received order days, compound fertilizer capacity utilization rate, and compound fertilizer prices are provided [45][48] - **Downstream Industrial Demand**: Information about the capacity utilization rate and production of formaldehyde, production of melamine, capacity utilization rate of melamine, national building materials and home furnishing index, and vehicle urea price is presented [54][58] - **Inventory and Export Situation**: Data on factory inventory, port inventory, Guangxi inventory, downstream enterprise inventory, compound fertilizer inventory, and export volume are shown [65][71] - **Cost and Profit**: The report provides data on fixed - bed cost, coal - water slurry cost, natural gas - fired cost, and their corresponding profits over multiple years [77]

Report Summary 1. Investment Rating - **Unilateral**: Neutral - **Inter - period**: None [3] 2. Core View Due to the geopolitical military conflict between Iran and Israel, international urea prices have soared, boosting market sentiment and causing significant increases in both domestic futures and spot prices. The urea industry is operating at a high level of production, with few planned device overhauls, leading to expected increases in production and greater supply - side pressure. The downstream agricultural demand for top - dressing and restocking has increased, resulting in higher pre - sale orders from factories. However, industrial demand remains weak, with the capacity utilization rate of compound fertilizers continuing to decline and the melamine industry operating at a low level. Urea manufacturers are exporting in an orderly manner, with an increase in the volume of urea gathered at ports, leading to rising port inventories and a downward trend in enterprise inventories. The prices of upstream coal and natural gas raw materials are stable, maintaining a stable cost structure. Currently, the supply - demand situation in the urea market has not been substantially alleviated, and subsequent attention should be paid to downstream demand and market sentiment [2] 3. Summary by Directory 3.1 Price and Spread - **Market Prices**: The closing price of the urea main contract is 1730 yuan/ton (- 50); the market price of small - particle urea in Henan is 1820 yuan/ton (- 10); in Shandong, it is 1820 yuan/ton (- 20); and in Jiangsu, it is 1830 yuan/ton (- 10). - **Basis**: The Shandong urea basis is 90 yuan/ton (+ 30); the Henan urea basis is 90 yuan/ton (+ 40); and the Jiangsu urea basis is 100 yuan/ton (+ 40). - **Profit**: The urea production profit is 290.0 yuan/ton (- 20.0), and the export profit is 511.9 yuan/ton (+ 9.6) [1] 3.2 Upstream Supply - **Capacity Utilization**: As of June 20, 2025, the enterprise capacity utilization rate is 88.9% (+ 1.1%). - **Production Forecast**: Urea production is expected to increase due to high - level operation and few planned device overhauls [1][2] 3.3 Downstream Demand - **Agricultural Demand**: The demand for top - dressing and restocking in the agricultural sector has been released, and factory pre - sale orders have increased. - **Industrial Demand**: The capacity utilization rate of compound fertilizers is 31.8% (- 2.0%), and the melamine capacity utilization rate is 64.3% (- 2.0%), remaining at a low level [1][2] 3.4 Urea Inventory - **Enterprise Inventory**: As of June 20, 2025, the enterprise in - factory inventory is 113.6 tons (- 4.1), showing a downward trend. - **Port Inventory**: The port inventory is 29.5 tons (+ 5.0), showing an upward trend [1][2]