1. Report Industry Investment Rating - No information provided in the report. 2. Core Viewpoints of the Report - In February, the demand for industrial silicon will decline significantly, with a possible 50% production cut by large Xinjiang silicone manufacturers, and a reduction of about 15,000 tons in polysilicon production compared to January. The supply mainly depends on the production cut plans of leading large manufacturers. If they cut production as planned, the monthly output of industrial silicon will decrease by 60,000 - 70,000 tons to 300,000 tons compared to January. [6] - If large manufacturers cut production of industrial silicon and silicone as planned, the supply and demand of industrial silicon in February will be balanced or there will be a slight inventory reduction. In the context of a bull market in the commodity market, industrial silicon, as a "low - valuation" variety, may experience an upward trend under the logic of "fundamental improvement". However, in the medium term, without changes in the cost side and supply - side policies, a price above 9,500 yuan/ton can stimulate an increase in supply. In the second quarter, the demand for industrial silicon is expected to be weak. Overall, the price of industrial silicon in February may first strengthen and then weaken, with a reference range of (8,500, 9,500). [7] 3. Summary According to the Directory 3.1 First Part: Preface Summary 3.1.1 Supply - Demand Outlook - In February, large Xinjiang silicone manufacturers may cut production by half. The polysilicon operating rate remains unchanged, but Tongwei stopped production at the end of January, resulting in a reduction of about 15,000 tons in polysilicon production in February compared to January. The demand for industrial silicon from aluminum alloy and exports remains stable for the time being, but the overall demand for industrial silicon in February will decline significantly. In terms of supply, the operating rates in Southwest China, Inner Mongolia, Gansu, and Ningxia will not change much in February, and the focus is on the production cut plans of leading large manufacturers. If they cut production as planned, the monthly output of industrial silicon will decrease by 60,000 - 70,000 tons to 300,000 tons compared to January. [6] 3.1.2 Trading Logic - If large manufacturers cut production of industrial silicon and silicone as planned, the supply and demand of industrial silicon in February will be balanced or there will be a slight inventory reduction. In the context of a bull market in the commodity market, industrial silicon, as a "low - valuation" variety, may experience an upward trend under the logic of "fundamental improvement". However, in the medium term, without changes in the cost side and supply - side policies, a price above 9,500 yuan/ton can stimulate an increase in supply. In March, some polysilicon enterprises will resume production, but in the case of weak terminal demand, some enterprises may further cut production. Therefore, the demand for industrial silicon in the second quarter will be weak. Overall, the price of industrial silicon in February may first strengthen and then weaken, with a reference range of (8,500, 9,500). [7] 3.1.3 Strategy Recommendation - Unilateral: Conduct range operations with a price reference of (8,500, 9,500). - Arbitrage: None for the time being. - Options: Sell out - of - the - money call options on rallies. [8] 3.2 Second Part: Fundamental Situation 3.2.1 Market Review - In January, the industrial silicon futures fluctuated within a narrow range, with a price range of (8,400, 9,100). In January, the supply and demand of industrial silicon were both weak. The production cuts of silicone and polysilicon dragged down the demand, and the production cut of industrial silicon by Tongwei Co., Ltd. and the maintenance of some industrial silicon enterprises in the northwest reduced the supply of industrial silicon. In terms of cost, the material prices of industrial silicon were generally stable in January, and the fluctuations of coking coal futures were not significant. The impact of cost - side disturbances on the market was limited. In January, the commodity market had a strong bullish atmosphere, but the fundamentals of industrial silicon were poor, the valuation was moderately low, and the market enthusiasm was average, resulting in a narrow - range price fluctuation. [12] 3.2.2 Demand: The demand for industrial silicon in February will decline month - on - month - **DMC production**: The DMC production in February will decrease month - on - month. [21] - **Polysilicon production**: The polysilicon production in February will decrease. The total domestic polysilicon production in February is expected to be 81,600 tons, a decrease of 16,100 tons compared to January. [24] - **Aluminum alloy and exports**: The demand for industrial silicon from aluminum alloy and exports is resilient. [27] 3.2.3 Supply: The production of industrial silicon in February mainly depends on the production cut plans of leading large manufacturers - The operating rates in Southwest China, Inner Mongolia, Gansu, and Ningxia will not change much in February. The focus is on the production cut plans of leading large manufacturers. If they cut production as planned, the monthly output of industrial silicon will decrease by 60,000 - 70,000 tons to 300,000 tons compared to January. [6][32] 3.2.4 Cost and Inventory: The cost is temporarily stable, and the inventory is high but not significantly bearish - The cost of industrial silicon is mainly affected by the prices of raw materials such as coking coal and silica. Currently, the prices of these raw materials are relatively stable, so the cost of industrial silicon is temporarily stable. The inventory of industrial silicon is high, but considering the possible production cuts of large manufacturers and the potential improvement in demand, the high inventory does not significantly suppress the price. [45] 3.3 Third Part: Future Outlook and Strategy Recommendation - **Supply - Demand Outlook**: The demand for industrial silicon in February will decline, and the supply mainly depends on the production cut plans of large manufacturers. If they cut production as planned, the supply and demand will be balanced or there will be a slight inventory reduction. [6] - **Trading Logic**: In February, industrial silicon may experience an upward trend under the logic of "fundamental improvement", but in the medium term, the price above 9,500 yuan/ton can stimulate an increase in supply. The demand in the second quarter is expected to be weak. The price in February may first strengthen and then weaken, with a reference range of (8,500, 9,500). [7] - **Operation Strategy**: Unilateral operations should be conducted within the range of (8,500, 9,500), and out - of - the - money call options can be sold on rallies. [8]

1. Report Industry Investment Rating - No information provided 2. Core View of the Report - The supply of industrial silicon sees concurrent reduction in the southwest and increase in the northwest; the demand from polysilicon is highly uncertain, while the demand from silicone and aluminum alloy is relatively stable; cost provides support for prices, while high inventory restricts the upward price movement. The industrial silicon price showed an upward trend today, with the overall price remaining high. Currently, the cost is maintained at 8,800 - 9,000 yuan/ton. It is expected that industrial silicon will rely on cost support, and it is recommended to buy on dips [2] 3. Summary by Relevant Catalogs 3.1 Futures Market - The closing price of the main contract was 9,170 yuan/ton, up 215 yuan; the main contract's open interest was 211,670 lots, up 10,152 lots; the net position of the top 20 was -55,846 lots, down 7,555 lots; the warehouse receipts of the GFE were 48,044 lots, down 141 lots; the closing price of the December contract for industrial silicon was -375 yuan/ton, unchanged; the spread between the November and December contracts for industrial silicon was -375, unchanged [2] 3.2 Spot Market - The average price of oxygen - passed 553 silicon was 9,350 yuan/ton, unchanged; the average price of 421 silicon was 9,650 yuan/ton, unchanged; the basis of the Si main contract was 180 yuan/ton, down 215 yuan; the spot price of DMC was 11,275 yuan/ton, unchanged [2] 3.3 Upstream Situation - The average price of silica was 410 yuan/ton, unchanged; the average price of petroleum coke was 2,110 yuan/ton, up 80 yuan; the average price of clean coal was 1,850 yuan/ton, unchanged; the average price of wood chips was 490 yuan/ton, unchanged; the ex - factory price of graphite electrodes (400mm) was 12,250 yuan/ton, unchanged [2] 3.4 Industry Situation - The monthly output of industrial silicon was 402,800 tons, up 36,000 tons; the weekly social inventory of industrial silicon was 552,000 tons, up 10,000 tons; the monthly import volume of industrial silicon was 70,232.72 tons, up 1,939.85 tons; the monthly export volume of industrial silicon was down 6,409.29 tons [2] 3.5 Downstream Situation - The weekly output of silicone DMC was 44,900 tons, up 700 tons; the average price of aluminum alloy ADC12 in the Yangtze River spot market was 21,100 yuan/ton, unchanged; the overseas market price of photovoltaic - grade polysilicon was 15.85 US dollars/kg, unchanged; the weekly average spot price of photovoltaic - grade polysilicon was 6.51 US dollars/kg, down 0.02 US dollars/kg; the monthly export volume of unforged aluminum alloy was 23,495.34 tons, down 5,568.37 tons; the weekly operating rate of silicone DMC was 70.05%, up 0.69 percentage points; the monthly output of aluminum alloy was 1,776,000 tons, up 141,000 tons; the monthly export volume of aluminum alloy was down 5,568.37 tons [2] 3.6 Industry News - On October 28th, GCL mentioned in a CCTV interview that 17 enterprises have basically signed, and the establishment of the consortium is expected to be completed within this year. In terms of industrial silicon, from the fundamental perspective, on the supply side, Sichuan and Yunnan are transitioning from the wet season to the dry season in October, leading to an increase in manufacturers' production costs. Some enterprises with exhausted raw materials have chosen to stop production. As November approaches, the scale of production cuts during the dry season is expected to further expand. In Xinjiang, with stable and low - cost power supply, some manufacturers are actively investing in production, increasing the number of open furnaces and continuously releasing production capacity. On the demand side, the downstream of industrial silicon is mainly concentrated in the silicone, polysilicon, and aluminum alloy fields [2] 3.7 Viewpoint Summary - In the silicone segment, the inventory is lower than the historical average. The production profit of silicone has slightly rebounded but is still in the loss range, providing a certain rigid - demand procurement support for industrial silicon. Currently, most silicone manufacturers still have some pre - sold orders, and there are many maintenance manufacturers, with some planning to enter maintenance, which maintains the demand for industrial silicon to a certain extent. In the polysilicon segment, the inventory is as high as 278,300 tons, higher than the historical average. The price of silicon wafers is flat, and the price of solar cells is falling. The downstream transmission is not smooth, and leading enterprises have maintenance expectations, so there is a risk of weakening demand support for industrial silicon in the future. In the aluminum alloy segment, the operating rate of aluminum alloy enterprises remains stable, and the demand for industrial silicon remains high. The demand performance is relatively stable, but in terms of marginal effect, the pulling effect on the price of industrial silicon is limited [2]