1. Report Industry Investment Rating No information provided in the document. 2. Core Viewpoints of the Report - This week, ferroalloys showed relatively bright gains in the black sector, with the main silicon - iron contract rising by +4.26% and the main silicon - manganese contract rising by 4.44%. The price increase was mainly driven by news. In the first half of the week, market rumors about South Africa's potential manganese ore ecological tax led to a firming of manganese ore prices, and in the second half, news of differential electricity prices in Yulin affected the prices. Ferroalloys are supported by cost, and with positive market expectations near the Two Sessions, price increases are likely. However, the high inventory of silicon - manganese restricts its upward space, while the fundamentals of silicon - iron are better [2]. - The production of silicon - iron and silicon - manganese is at the lowest level in the past five years, and the production profit is in the red, so there is little incentive for复产. On the demand side, the recovery of molten iron production and the improvement of steel mill profitability support the demand for ferroalloys. The main contradiction lies in the high inventory of silicon - manganese, which is at the highest level in the past five - year history, with a year - on - year increase of +241.89%, and the de - stocking pressure is large [2]. - In the short term, the price of silicon - manganese is supported by news about manganese ore, but in the future, as the sentiment fades and high inventory exerts pressure, industrial players may enter the market for hedging. Silicon - iron has better fundamentals and cost support, but its upward space may be limited due to the weak downstream fundamentals of the black sector [2][3]. - The trend of ferroalloys is expected to be range - bound. The price range of the silicon - iron 05 contract is between 5400 - 5900, and that of the silicon - manganese 05 contract is between 5700 - 6100. For basis, monthly spread, and hedging arbitrage strategies, it is recommended to wait and see [12]. 3. Summary by Directory Chapter 1: Core Contradictions and Strategy Recommendations 1.1 Core Contradictions - This week, ferroalloys had significant price increases in the black sector. The price increase was driven by news, including rumors of South Africa's manganese ore ecological tax and differential electricity prices in Yulin. Ferroalloys are supported by cost, and market expectations near the Two Sessions also contribute to the price increase. The supply of silicon - iron and silicon - manganese is at a low level, and the production profit is negative, so there is little incentive for复产. The demand is supported by the recovery of molten iron production and the improvement of steel mill profitability. The main contradiction is the high inventory of silicon - manganese, which restricts its upward space, while the fundamentals of silicon - iron are better [2]. 1.2 Trading - Type Strategy Recommendations - **Market Positioning**: No specific content provided. - **Basis, Monthly Spread, and Hedging Arbitrage Strategy Recommendations**: It is recommended to wait and see for basis, monthly spread, and hedging arbitrage strategies [12]. 1.3 Industry Customer Operation Recommendations - **Price Range Forecast**: The monthly price range forecast for silicon - iron is 5300 - 6000, with a current 20 - day rolling volatility of 16.80% and a historical percentile of 42.1% in three years. For silicon - manganese, the price range is 5300 - 6000, with a current 20 - day rolling volatility of 15.25% and a historical percentile of 29.9% in three years [10]. - **Hedging Strategies**: For enterprises with high finished - product inventory, it is recommended to short ferroalloy futures (SF2603, SM2603) with a hedging ratio of 15% at an entry range of SF: 5800 - 6000, SM: 6000 - 6200 to prevent inventory price decline. For enterprises with low procurement inventory, it is recommended to buy ferroalloy futures (SF2603, SM2603) with a hedging ratio of 25% at an entry range of SF: 5200 - 5300, SM: 5300 - 5400 to lock in procurement costs [13]. Chapter 2: This Week's Important Information and Next Week's Attention Events 2.1 This Week's Important Information - **Positive Information**: Ferroalloys are supported by cost, with limited downward space. Manganese ore prices are firm due to news, and steel mills' profitability is improving, which drives production and supports the demand for ferroalloys. There are also market rumors about differential electricity prices in Yulin and positive expectations near the Two Sessions [11][18]. - **Negative Information**: The high inventory of silicon - manganese is at a five - year high, with large de - stocking pressure. The downstream steel consumption is average, and the hot - rolled coil inventory is at a historical high [18]. 2.2 Next Week's Important Events to Watch - Next Monday, the US will release the February manufacturing PMI. - Next Tuesday, FOMC permanent voter and New York Fed President Williams will give a speech, and China will release the February manufacturing PMI [19]. Chapter 3: Market Interpretation 3.1 Price - Volume and Capital Interpretation - **Unilateral Trend and Capital Movement**: No specific analysis content provided. - **Basis and Monthly Spread Structure**: No specific analysis content provided. Chapter 4: Valuation and Profit Analysis 4.1 Upstream and Downstream Profit Tracking in the Industry Chain - The production profit of silicon - iron and silicon - manganese is tracked, and the relationship between production profit and output is analyzed. The electricity price seasonality of ferroalloys in Ningxia and Inner Mongolia is also presented. In addition, the inventory structure, price, and import profit of coking coal, as well as the price, inventory, and shipping volume of manganese ore, are analyzed [41][47][49]. 4.2 Import - Export Profit Tracking - The relationship between the export profit and export volume of silicon - iron is analyzed [65]. Chapter 5: Supply - Demand and Inventory Deduction 5.1 Supply - Demand Balance Sheet Deduction - The production profit of ferroalloys has marginally improved but is still in the red. The production is expected to remain at the current level with small fluctuations, and the production decline trend is flattening and turning upward. On the demand side, the profitability of steel mills drives production recovery, and the increase in molten iron production supports the demand for ferroalloys. However, the high inventory of ferroalloys, especially silicon - manganese, requires production cuts for de - stocking [66]. 5.2 Supply - Side and Deduction - The production of silicon - iron and silicon - manganese is at a low level, and the relationship between production profit and output is analyzed. The production is expected to remain stable with small fluctuations [66][70]. 5.3 Demand - Side and Deduction - The demand for silicon - iron and silicon - manganese is supported by the recovery of molten iron production and the improvement of steel mill profitability. The relationship between demand and factors such as iron - water production, steel - mill profitability, and export profit is analyzed [74][76][79]. 5.4 Inventory - Side and Deduction - The inventory of silicon - iron and silicon - manganese is at a high level, especially the inventory of silicon - manganese is at a five - year high. The inventory trend is analyzed, and the de - stocking pressure is large [66][90].