EB SECURITIES: 25 years since the release of Central Document No. 1, optimistic about the investment value of the agricultural chemicals sector as the spring planting season approaches.

Recently, GMTEight APP learned that EB SECURITIES published a research report, stating that on February 23, 2025, the Central No. 1 Document was released, emphasizing food security and first proposing the concept of "agricultural new quality productivity." The document emphasized the need to enhance the supply guarantee capability of important products such as grains by Shenzhen Agricultural Power Group, and to vigorously promote collaborative research in agricultural science and technology. In the agricultural chemicals market, as spring plowing approaches, the price of potassium chloride is rapidly rising, and the phosphorus ammonium industry is showing signs of recovery; since 2025, the price of urea has gradually increased from a low level, and with the arrival of spring plowing fertilizer demand, the purchasing volume is expected to increase. EB SECURITIES' views are as follows: In 2025, the Central No. 1 Document emphasized food security and first proposed "agricultural new quality productivity." On February 23, 2025, the Central No. 1 Document was released, and "Opinions of the Central Committee of the Communist Party of China and the State Council on Further Deepening Rural Reform and Solidly Promoting the Comprehensive Revitalization of Rural Areas" proposed the need to continuously enhance the supply guarantee capability of important products such as grains by Shenzhen Agricultural Power Group, intensify actions to improve the yield of major crops, stabilize the sown area of grains, focus on enhancing yield and quality, and ensure stable and abundant grain production. Further expand the scale of initiatives to improve crop yields, increase efforts to promote high-yield and efficient models, promote water and fertilizer integration, and promote large area production increases. Intensify the implementation of tasks to increase grain production capacity by one hundred billion tons. Use multiple measures to consolidate the achievements of expanded soybean planting, explore the potential for expanding rapeseed and peanuts, and support the development of woody oil crops such as camellia. Promote stable production and quality improvement of cotton, sugar crops, natural rubber, etc. At the same time, the document emphasized the need to promote collaborative research in agricultural science and technology. Use technological innovation to lead the aggregation of advanced production factors, develop agricultural new quality productivity based on local conditions. Target accelerated breakthroughs in key core technologies, strengthen the overall coordination of agricultural scientific research resources, and cultivate leading agricultural technology companies. Implement the revitalization of the seed industry, leverage major agricultural research platforms such as the "Silicon Valley of the South," and accelerate the breakthrough of a batch of groundbreaking varieties. Continue to promote the industrialization of biological breeding. Promote the high-quality development of agricultural machinery and equipment, accelerate the research and application of domestically advanced and applicable agricultural machinery and equipment, and renew old agricultural machinery. Support the development of Jiangsu Nonghua Intelligent Agriculture Technology, expand the application scenarios of artificial intelligence, data, low-altitude technologies, etc. As spring plowing approaches, the price of potassium chloride is rapidly rising, and the phosphorus ammonium industry is expected to recover Regarding potassium chloride, influenced by the spring fertilization and the demand from countries in the southern hemisphere such as Brazil, potassium chloride prices began to rise rapidly at the beginning of January 2025. According to the Bai Chuan Ying Fu data, as of February 24, domestic potassium chloride prices had risen by about 24.0% compared to the beginning of January 2025. With the demand for fertilization during the upcoming spring plowing season, potassium chloride prices are expected to rise. As for phosphorus ammonium, despite the impact of the winter industry offseason, and even with some production facilities reducing or halting production for maintenance, domestic phosphorus ammonium prices have still fallen somewhat recently, but overall price fluctuations have been relatively stable. Additionally, as the price of phosphate ore remains high, the decline in phosphorus ammonium prices has led to a narrowing of the corresponding product's profit margin, with the average profit margin of the domestic phosphorus ammonium industry currently nearing the breakeven point. Looking ahead, with the arrival of the peak spring plowing season and the rise in prices of other single-element fertilizers such as potassium, domestic phosphorus ammonium prices and corresponding profitability are expected to recover. Since 2025, the price of urea has slowly increased from the bottom, and with the arrival of spring plowing fertilizer demand, purchasing volume will increase According to Bai Chuan Ying Fu data, as of February 24, 2025, the domestic urea spot price was about 1807 yuan per ton, a growth of about 6.7% compared to the beginning of the year. As for international urea prices, in January 2025, international urea prices continued to rise with tightening market supply. Iran, in particular, faced supply shortages, and market bullish sentiment continued to grow due to factors such as increasing demand, upcoming tenders in India, and rising natural gas prices in Europe. As for profit, the current average gross profit margin of the urea industry is still at a historically low level, but has returned above the breakeven point. In terms of supply and demand, on the supply side, the market supply capacity of urea in February continued to recover; on the demand side, after the Chinese New Year holiday, downstream compound fertilizer and plate factory plants resumed work, leading to an increase in urea purchases. Combined with the upcoming spring plowing season and the arrival of fertilizer demand, agricultural purchase volume is expected to increase significantly, and the release of phase demand is expected to support a continued rebound in urea prices. Risk Analysis: Rapid decline in raw materials and maintaining high levels, downstream demand falling short of expectations.