Report Industry Investment Rating No information provided in the content. Core Viewpoints - The view on urea this week is a fluctuating decline. In the short term, the driving force is neutral. The futures price is expected to be under pressure and fluctuate, with support mainly coming from continuous purchases in the Northeast. The fundamental driving force of urea is currently neutral, and the continuous destocking of explicit inventory supports the price. In terms of valuation, the spot trading slowed down from Thursday to Sunday, and there may be policy pressure. The upper resistance level for the 01 contract is 1700 - 1720 yuan/ton, and the lower static support is 1580 - 1600 yuan/ton [2]. - For trading strategies, the price is expected to decline weakly as it approaches the upper limit of valuation with weakening trading volume. The 1 - 5 month spread is gradually entering a fluctuating pattern, and it is recommended to take a long position in the 5 - 9 spread when the price is low after the premium of the 05 contract is compressed. There is no cross - variety strategy for now [2]. Summary by Relevant Catalogs Supply - **Capacity**: The expansion pattern of urea production capacity continued in 2025. In 2024, the total new production capacity was 3920,000 tons, and in 2025, it was 6640,000 tons. There are also plans for new production capacity in 2026 [23]. - **Production**: This week (20251127 - 1203), the output of Chinese urea production enterprises was 1.3851 million tons, a decrease of 31,900 tons from the previous period, a month - on - month decrease of 2.25%. Next week, the weekly output of Chinese urea is expected to be around 1.37 million tons, a slight decrease from this period. The production profit is at the break - even point, and the daily output of urea remains at a high level [2][26]. - **Cost**: Raw material prices have stabilized, and the cash - flow cost line of factories has increased. The cash - flow cost and full cost of synthetic ammonia and urea in fixed - bed factories in Shanxi have been calculated, and the cash - flow cost of urea production using the gas - flow bed method has also been presented [29]. - **Profit**: The profit corresponding to the cash - flow cost of urea is currently in a profitable state [34]. - **Net Import (Export)**: During the reserve period, export policies are tightened. The export volume of urea in 2025 shows an increasing trend, and the export profit of small - particle urea is also presented [40]. Demand - **Agricultural Demand**: Agricultural demand is seasonally strengthening. High - standard farmland construction has led to an increase in the demand for urea from corn. The demand for agricultural fertilizers varies by region and season [46][49]. - **Industrial Demand** - **Compound Fertilizer**: The fundamentals of compound fertilizers are presented through indicators such as production cost, inventory, production profit, and capacity utilization rate [53][54][55]. - **Melamine**: The production profit, market price, output, and capacity utilization rate of melamine in Shandong are shown [57][59]. - **Real Estate and Panels**: The demand for panels from the real estate industry has limited support, but panel exports are resilient, as shown by data on panel export volume, real estate completion area, and construction area [61]. Inventory - Factory inventory: On December 3, 2025, the total inventory of Chinese urea enterprises was 1.2905 million tons, a decrease of 73,400 tons from the previous week, a month - on - month decrease of 5.38%. The inventory of enterprises in some provinces decreased, while that in others increased [2][67]. - Port inventory: As of December 4, 2025 (week 49), the sample inventory of Chinese urea ports was 105,000 tons, an increase of 5000 tons from the previous period, a month - on - month increase of 5%. The current port collection rhythm is still slow [2][67]. International Urea - International urea prices are presented through the FOB prices of large - particle urea in China, the Baltic Sea, and the Middle East, as well as the CFR price of large - particle urea in Brazil [71][72][73].

Group 1: Report Industry Investment Rating - No relevant content found Group 2: Core Views of the Report - Urea's fundamental valuation is low. Without further adjustment to export policies, it will continue to accumulate inventory in the fourth quarter. The short - term internal drive of the industry is weak, and both compound fertilizer and industrial demand are sluggish, so the medium - term trend is weak. The production cost of gas - based enterprises cannot support the price effectively. Attention should be paid to whether there will be new export quotas. Also, focus on the macro - sentiment [3]. - The trading logic for the near - term: Although new delivery warehouses have been added for urea, the cheapest deliverable goods are still in Henan and Shandong. Considering the disappearance of the export expectation for the 01 contract, the 1 - 5 spread should be in a reverse arbitrage. Due to the expectation of autumn fertilizer for the 01 contract, it still has a premium [6]. - The trading expectation for the long - term: The domestic daily urea production fluctuated slightly between 195,000 - 201,000 tons around the holiday. After the shutdown of factories in regions such as Shanxi, the Northwest, and Inner Mongolia, the daily output dropped to around 195,000 tons, but the domestic trade supply - demand contradiction persists. After the holiday, the total inventory of urea enterprises was around 1.4 million tons, significantly increasing compared to before the holiday. Some urea factories had poor pre - sales before the holiday and urgently need to replenish new orders [11][21]. Group 3: Summary by Relevant Catalogs Chapter 1: Core Contradictions and Strategy Suggestions 1.1 Core Contradictions - Urea's fundamental valuation is low, and it will accumulate inventory in the fourth quarter without export policy adjustment. The industry's internal drive is weak, and demand from compound fertilizer and industrial sectors is sluggish, leading to a weak medium - term trend. The cost of gas - based enterprises cannot support prices, and new export quotas need attention. Macro - events such as the Sino - US economic and trade consultations, the Fourth Plenary Session of the 20th Central Committee, and the "15th Five - Year Plan" time - node should be monitored [3]. - Near - term trading: The cheapest deliverable urea is in Henan and Shandong. The 01 contract's 1 - 5 spread should be in reverse arbitrage, and the 01 contract has a premium due to autumn fertilizer expectations [6]. - Long - term trading: Domestic urea daily production dropped to around 195,000 tons after factory shutdowns, and inventory increased after the holiday. Some factories need to replenish new orders [11]. 1.2 Trading - type Strategy Suggestions - **行情定位**: Urea will fluctuate weakly. The UR2601 contract will operate in the range of 1,550 - 1,750 yuan/ton. It is recommended to short at prices above 1,750 and conduct reverse arbitrage for the 1 - 5 spread when it is above - 10 [13]. - **基差、月差及对冲套利策略建议**: For the basis strategy, the 11, 12, and 01 contracts have a weak unilateral trend, and attention should be paid to when the pre - holiday price cuts to receive orders increase. The 02, 03, 04, and 05 contracts are strong with peak - season demand expectations. For the spread strategy, the upper pressure for the 01 contract is 1,710 - 1,720 yuan/ton, and the static support is 1,550 - 1,620 yuan/ton with dynamic fluctuations. It is recommended to short the 01 contract at high prices and conduct reverse arbitrage for the 1 - 5 spread. There is no hedging arbitrage strategy [14][15]. Chapter 2: This Week's Important Information and Next Week's Events to Watch 2.1 This Week's Important Information - **Positive information**: India announced a new round of urea import tenders on October 1st, with the opening on October 15th and the latest shipping date on December 10th. The fourth quarter is the winter - storage period for the fertilizer industry, and the relatively low price may attract spontaneous reserves [17]. - **Negative information**: The daily production of the urea industry has been above 190,000 tons for a long time this year, and even when it dropped to around 182,000 tons in late August and early September, it was difficult to relieve the inventory pressure. The continuous decline in prices has led to a lack of market confidence, and the market was sluggish in September. Without the support of export and macro - sentiment, the downstream purchasing enthusiasm has declined [18][19]. 2.2 Next Week's Events to Watch - On October 19th, Vice - Premier He Lifeng of the State Council agreed with the US to hold a new round of Sino - US economic and trade consultations as soon as possible. The Fourth Plenary Session of the 20th Central Committee will be held next week, and it is an important time - node for the "15th Five - Year Plan" [20]. Chapter 3: Disk Interpretation 3.1 Price - Volume and Capital Interpretation - The domestic daily urea production dropped to around 195,000 tons after factory shutdowns, and the inventory increased after the holiday. Some factories need to replenish new orders. On the demand side, continuous rainfall in Shandong and Henan has postponed agricultural demand. Many compound fertilizer factories in the region have shut down, and the impact of previous Indian tenders and export speculations has weakened. Currently, the rigid demand is cautious in replenishing goods, and the willingness of middle and downstream enterprises to stock up is poor [21]. - The current main contradiction is the weak domestic demand. It is expected that the increase in exports cannot make up for the weakening domestic demand. Both compound fertilizer and industrial demand are sluggish, so the medium - term trend is under pressure, and the 1 - 5 spread of urea is in a reverse arbitrage pattern [22]. 3.2 Industry Hedging Suggestions - **Price range prediction**: The predicted price range for urea is 1,650 - 1,950 yuan/ton, with a current 20 - day rolling volatility of 27.16% and a historical percentile of 62.1% over three years [29]. - **Urea hedging strategy**: For inventory management, when the finished - product inventory is high and worried about price drops, it is recommended to short urea futures to lock in profits, with a 25% hedging ratio and an entry range of 1,800 - 1,950 yuan/ton. Also, buy put options to prevent large price drops and sell call options to reduce capital costs. For procurement management, when the procurement inventory is low and aiming to prevent price increases, buy urea futures at present, with a 50% hedging ratio and an entry range of 1,650 - 1,750 yuan/ton. Sell put options to collect premiums and reduce procurement costs [29]. Chapter 4: Valuation and Profit Analysis 4.1 Upstream Profit Tracking in the Industrial Chain - Information on the seasonal production costs and profits of different urea production methods such as fixed - bed, natural - gas - based, and water - coal - slurry gasification is presented through various charts [32][33][35]. 4.2 Upstream Operating Rate Tracking - Information on the seasonal production profits, production costs, daily output, and capacity utilization rates of different urea production methods and in different regions is shown in multiple charts [41][42][43]. 4.3 Upstream Inventory Tracking - The seasonal inventory data of Chinese urea enterprises, ports, and in specific regions like Guangdong and Guangxi are presented in charts [47][48][49]. 4.4 Downstream Price and Profit Tracking - Information on the seasonal capacity utilization rates, inventory, production profits, and market prices of downstream products such as compound fertilizers and melamine is shown in various charts [52][54][58]. 4.5 Spot Production and Sales Tracking - The seasonal production and sales data of urea in different regions such as Shandong, Henan, Shanxi, Hebei, and East China are presented in charts [75][77].