Core Viewpoints - The current structure of the domestic urea market shows a contradiction: inventory is decreasing while agricultural demand is in a lull, and small package exports are restricted [3] - Despite some maintenance in production facilities, overall daily output remains high, indicating sufficient market supply [3] - Agricultural demand is weakening as the northern summer fertilization season comes to an end, and the production of compound fertilizers for autumn has not yet started on a large scale, leading to a supply-demand imbalance and downward pressure on futures prices [3] Supply Side Analysis - Domestic urea daily production is approximately 192,600 tons with an operating rate of 81.62%, which is an increase of 9,400 tons compared to the same day last year [1] - Several production facilities are undergoing maintenance, including a 15-day maintenance at Henan Zhongying and a 200-day upgrade at Shanxi Jinfeng [1][2] - Overall supply remains ample despite some production disruptions [1][3] Demand Side Analysis - Agricultural demand is expected to weaken as the summer fertilization season concludes, and the production of compound fertilizers has not yet ramped up significantly [2][3] - Downstream compound fertilizer manufacturers are primarily focused on selling existing inventory due to high stock levels, which limits support for urea demand [2][3] - The average pre-sale days for July is 3.43 days, unchanged month-on-month but down 12.60% year-on-year, indicating a short-term purchasing approach from downstream buyers [2] Inventory and Export Dynamics - As of July 23, 2025, total inventory of Chinese urea enterprises is 858,800 tons, a decrease of 36,700 tons or 4.10% from the previous week [2] - Although domestic urea demand is weak, some inventory is still being exported, leading to a slight reduction in overall factory stock [2] - India’s IPL has announced a new round of urea import tenders for 2 million tons, with a bid deadline of August 4 [2] Market Strategy - A short-term range trading strategy is recommended, with a price range of 1,740 to 1,820 [4] - If futures prices fall below 1,780 yuan/ton, a small long position may be considered due to the higher certainty of supply contraction compared to the persistence of weak demand [4] - If prices rebound above 1,830 yuan/ton, a short position may be advisable as spot prices are unlikely to support significant futures price increases [4]