Report Industry Investment Rating - The investment rating for urea is "Volatility" [6] Core Viewpoints of the Report - The continuous implementation of new urea production capacity and the limited impact of anti - involution policy expectations have led to persistent supply - side pressure. The key to the market lies in exports, and it's necessary to pay attention to whether there will be new changes in export policies and whether the market will conduct a new round of export games for the 2605 contract [2][4][62] - The demand in the fourth quarter is expected to be limited. Agricultural demand may be released periodically but with general intensity, and it will enter the traditional off - season after October. The enthusiasm for tendering in the off - season storage may be high, but the actual impact may be limited. Industrial demand is expected to be relatively stable [3][47] Summary by Directory 1. Export Increment Fails to Change the Excess Pattern, Urea Weakens after Oscillating in the Third Quarter - The existing export quota cannot correct the annual supply - demand surplus pattern of urea, and the profit center of the urea industry still has room to decline. The 2509 contract in the third quarter oscillated around 1700 - 1800 yuan/ton, and the 2601 contract is currently running in the 1600 - 1700 yuan/ton range [13] 2. New Urea Production Capacity Continues to Be Implemented, and the Impact of Anti - Involution Policy Expectations Is Temporarily Limited - In the third quarter, new urea production devices were put into operation as expected. From January to August, the urea output reached 48.14 million tons, with a year - on - year growth of 13.3%, which put pressure on the urea price [18] - The impact of anti - involution policy expectations is limited. The proportion of truly old - fashioned production capacity is less than 5%, and the necessity of quickly clearing the remaining production capacity through administrative means is questionable. It is more likely to be cleared through the market [20][21] - In the fourth quarter, the supply pressure will still be large. It is estimated that the urea output will be 17.85 million tons, a year - on - year increase of about 7%. The variables are the possible extension of the gas - head device maintenance season and the impact of rising coal prices on marginal production capacity [24][25] 3. Agricultural Demand Has No Strong Driving Force, and Off - Season Storage May Only Play a Bottom - Supporting Role 3.1 Recent Compound Fertilizer Production and Sales Data Further Confirm the Overall Demand Front - Loading Problem This Year - The demand for urea in the first half of the year was higher than expected, mainly due to demand front - loading. The production and sales data of compound fertilizers from January to April were better than those in the same period of previous years, while the data from May to August were worse, indicating that the demand for compound fertilizers was overdrawn before May [34][35] 3.2 Off - Season Storage Can Only Play a Bottom - Supporting Role, and Industrial Demand Remains Weak - The off - season storage policy this year is basically the same as last year. The enthusiasm for tendering may be high, but the procurement rhythm is expected to be scattered, mainly playing a bottom - supporting role [38][39] - The industrial demand for urea such as melamine and urea - formaldehyde resin is expected to be relatively stable in the fourth quarter, and it is difficult to have obvious improvement [42] 4. Low Inventory in India Boosts the Scale of Indian Tenders, Pay Attention to Export Regulation in the Fourth Quarter - The international urea price is stronger than expected. India's urea production from January to August decreased by 6% year - on - year, and its inventory is less than 50% of the same period last year, so it has carried out a large number of import tenders [48][49] - The excess supply situation in China has not changed. Although China's supply in Indian tenders has increased, it is still within the quota system, which has not changed the domestic inventory accumulation situation [53][55] - It is necessary to pay attention to whether there will be new changes in China's export policy in the fourth quarter, such as the issuance of new quotas and the extension of the export window period [57][58] 5. Investment Suggestions - In the fourth quarter, the key contradiction is the continuous increase in urea factory inventory. The supply pressure will increase, and the demand is difficult to pick up significantly, so the key lies in exports [62] - The operating range of the 2601 contract is estimated to be 1580 - 1800 yuan/ton, and it is recommended that the off - season storage subjects disperse their storage rhythm [63]