Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - In 2026, the caustic soda market is expected to show a pattern of synchronous growth in supply and demand, but there will be a phased mismatch in rhythm and structure. The PVC market will face the triple characteristics of "high supply, pressured demand, and improved exports". The caustic soda market is expected to be volatile with a wide range, and the PVC market is expected to be volatile with a narrow range and the price center may move up [2][9]. - For caustic soda, the supply - side new capacity will continue to be released, and the demand - side main downstream alumina industry has a complex situation of "new investment and production cut expectations coexisting". For PVC, although the new capacity release slows down, the existing capacity output is still at a high level, and the industry is generally under pressure in a low - profit environment [9]. Summary According to the Table of Contents Annual Trend Review - In 2025, the PVC market fluctuated downward in the first half of the year and first rose then fell in the second half. The price was affected by factors such as social inventory, policy expectations, and overseas macro - uncertainties. The caustic soda market showed the characteristics of "falling from a high level and fluctuating in a range", and its price was driven by factors such as alumina demand, non - aluminum industry procurement rhythm, and chlor - alkali comprehensive cost [17][18]. Chlor - alkali New Capacity Situation - In 2025, the planned new capacity of the domestic PVC industry was 220 tons, and all were fulfilled by September, with a capacity growth rate of about 8%. In 2026, there is no clear new capacity plan. The new capacity of the domestic caustic soda industry in 2025 was significantly lower than expected, with only 90 tons added, and the planned new capacity in 2026 is about 256 tons, with an expected capacity growth rate of 5% [23][27]. Chlor - alkali Supply and Production Profit - **PVC**: As of October 2025, the cumulative PVC output was 2013 tons, a year - on - year increase of 3.34%. The production profit was in a deep - loss range for most of the time, and the industry supply pressure continued to exist [35]. - **Caustic Soda**: As of October 2025, the cumulative caustic soda output was 3514 tons, a year - on - year increase of 2.48%. The production profit was generally profitable, but it declined in November [48]. PVC and Caustic Soda Basis Trend and Future Judgment - **PVC**: In 2025, the PVC market maintained a negative basis structure. In the future, the negative basis structure will still be the norm, but the level may narrow slightly. - **Caustic Soda**: In 2025, the caustic soda basis fluctuated sharply. In 2026, the negative basis may appear more frequently, and the overall basis center level may face downward pressure [60][61]. Chlor - alkali Import and Export Analysis - **PVC**: From January to October 2025, the domestic PVC export volume was 323 tons, a year - on - year increase of 48.85%. The export to India is expected to be further boosted, and the export to other regions is also increasing. PVC products export showed a pattern of mixed performance in 2025 [67][85]. - **Caustic Soda**: From January to October 2025, the domestic caustic soda cumulative export volume was 349 tons, a year - on - year increase of 42%. Indonesia and Australia are the main export destinations [90]. Chlor - alkali Demand Status and Outlook - **PVC**: In 2025, the PVC market showed a pattern of "increased supply, high - growth exports, and weak domestic demand". In 2026, the demand will still be dragged down by the real - estate market and maintain a weak and stable state [103]. - **Caustic Soda**: The demand for caustic soda is mainly concentrated in industries such as alumina, viscose staple fiber, printing and dyeing, and papermaking. In 2026, the new alumina capacity may bring new demand for caustic soda, but there are uncertainties [121][122]. Chlor - alkali Inventory Status and Outlook - In 2025, the PVC social inventory showed a pattern of year - on - year accumulation. In 2026, the PVC supply - demand fundamentals are expected to remain loose, and the marginal change in export demand will be the key variable affecting the social inventory destocking rhythm [142][145].

Report Summary 1. Report Industry Investment Rating No investment rating for the industry is provided in the report. 2. Core View The current sentiment of urea has improved, but the reversal may not have arrived from the supply - demand perspective. The current urea valuation is at a relatively low level, reflecting the pattern of strong supply and weak demand. There is insufficient short - term upward drive, and it is necessary to focus on the old device renovation of the chemical industry on the supply side and new export quota issuance [1]. 3. Summary by Relevant Catalogs 3.1 Price Changes - **Futures Prices**: UR01 urea futures price in Shanxi decreased from 1640.00 yuan/ton on October 27th to 1635.00 yuan/ton on October 28th, a decrease of 0.30%. UR05 decreased from 1713.00 yuan/ton to 1708.00 yuan/ton, a decrease of 0.29%. UR09 decreased from 1745.00 yuan/ton to 1736.00 yuan/ton, a decrease of 0.52% [1]. - **Spot Prices**: Domestic spot prices in Shandong, Henan, and Hebei remained unchanged. The price in Northeast China increased from 1600.00 yuan/ton to 1610.00 yuan/ton, an increase of 0.63%. The price in Jiangsu decreased from 1610.00 yuan/ton to 1600.00 yuan/ton, a decrease of 0.62% [1]. - **Upstream and Downstream Prices**: The prices of anthracite coal in Henan and Shanxi remained unchanged. The prices of compound fertilizer in Shandong and Henan remained unchanged. The price of melamine in Shandong remained unchanged, while that in Jiangsu increased from 5100.00 yuan/ton to 5150.00 yuan/ton, an increase of 0.98% [1]. 3.2 Basis and Spread - The basis of Shandong spot - UR increased from - 103.00 yuan/ton to - 98.00 yuan/ton, an increase of 5.00 yuan/ton. The spread of 01 - 05 remained unchanged at - 73.00 yuan/ton [1]. 3.3 Important Information - The opening price of the main contract 2601 of urea futures was 1636 yuan/ton, the highest price was 1645 yuan/ton, the lowest price was 1626 yuan/ton, the closing price was 1635 yuan/ton, and the settlement price was 1635 yuan/ton. The trading volume was 273001 lots [1]. 3.4 Trading Strategy - It is recommended to continue holding the previously sold out - of - the - money put options (view score: 0) [1].

Group 1: Report Industry Investment Rating - No information provided Group 2: Report's Core View - The current sentiment of urea has improved, but the reversal may not have arrived from the supply - demand perspective. The current futures market is mainly driven by short - position holders taking profit. It is recommended to continue holding previously sold out - of - the - money put options. The current urea valuation is relatively low, reflecting the pattern of strong supply and weak demand. If prices continue to fall, it may lead to a further decline in upstream production willingness and accelerate the industry's self - clearing. In the short term, there is insufficient upward driving force for urea, and the subsequent possible driving factors are the old device renovation in the chemical industry on the supply side and the issuance of new export quotas [1] Group 3: Summary by Relevant Catalogs Urea Futures Prices - UR01 closed at 1640.00 yuan/ton on October 27, down 2.00 yuan (-0.12%) from October 24. UR05 closed at 1713.00 yuan/ton, down 6.00 yuan (-0.35%). UR09 closed at 1745.00 yuan/ton, down 3.00 yuan (-0.17%) [1] Domestic Spot Prices (Small Granules) - In Shandong, the price was 1610.00 yuan/ton on October 27, up 40.00 yuan (2.55%) from October 24. In Henan, it was 1590.00 yuan/ton, up 20.00 yuan (1.27%). In Hebei, it was 1630.00 yuan/ton, up 30.00 yuan (1.88%). In Jiangsu, it was 1610.00 yuan/ton, up 40.00 yuan (2.55%). Prices in Shanxi and Northeast remained unchanged [1] Basis and Spread - The basis of Shandong spot - UR was - 103.00 yuan/ton on October 27, up 46.00 yuan from October 24. The spread of 01 - 05 was - 73.00 yuan/ton, up 4.00 yuan [1] Upstream Costs - The anthracite coal prices in Henan and Shanxi remained unchanged at 1030.00 yuan/ton and 880.00 yuan/ton respectively [1] Downstream Prices - The prices of compound fertilizer (45%S) in Shandong and Henan remained unchanged at 2900.00 yuan/ton and 2500.00 yuan/ton respectively. The melamine price in Shandong was 5084.00 yuan/ton on October 27, up 34.00 yuan (0.67%) from October 24, while the price in Jiangsu remained unchanged [1] Important Information - The opening price of the urea futures main contract 2601 was 1647 yuan/ton, the highest price was 1655 yuan/ton, the lowest price was 1635 yuan/ton, and the closing price was 1640 yuan/ton with a settlement price of 1641 yuan/ton. The position volume was 281954 lots [1] Trading Strategy - Hold the sold out - of - the - money put options (Viewpoint score: 0) [1]