Report Summary 1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints - In January, the main production center of industrial silicon will continue to shift northward. Although there is a reduction in production due to environmental protection control, it is difficult to offset the decline in demand. Polysilicon will have limited - production reduction, silicone will have group - reduction, and aluminum alloy will have environmental - protection reduction. Industrial silicon has cost support but no upward driving force, and it is advisable to consider short - selling on rebounds. [4] - Although the photovoltaic industry chain has seen price increases driven by battery cells recently, due to the transmission blockage in the component segment, the effect of further price increases is limited, and downstream industries will further expand the scale of production reduction. [4] - In January, with industry self - discipline and the joint production reduction of silicon materials, polysilicon is expected to have an unexpected reduction in supply, which will provide strong support. At the same time, due to the exchange's implementation of risk - control position limits, the upward premium space is tightened. Attention should be paid to the implementation of production reduction by silicon material factories, downstream receiving sentiment, and the inventory dynamics of the industrial chain. [4] 3. Summary by Directory 3.1 Futures Price - In December, the industrial silicon futures fluctuated weakly. As of the 31st, the main contract closed at 8,860 yuan/ton, with a monthly decline of 2.96%. The polysilicon futures fluctuated strongly, and the main contract closed at 57,920 yuan/ton within the month, with a monthly increase of 2.65%. [5] 3.2 Spot Price - All industrial silicon spot prices decreased. The price of non - oxygenated 553 decreased by 250 yuan/ton to 8,950 yuan/ton, oxygenated 553 decreased by 100 yuan/ton to 9,400 yuan/ton, and 421 decreased by 200 yuan/ton to 9,900 yuan/ton. Polysilicon P - type remained stable at 44,000 yuan/ton, and N - type increased by 800 yuan/ton to 51,800 yuan/ton. [5] 3.3 Spread - In December, the spread between 553 widened, the spread between high - and low - grade products narrowed, the regional spread of 553 widened, and the regional spread of 421 narrowed. The industrial silicon spot discount narrowed to 10 yuan/ton, and the polysilicon spot discount narrowed to 4,670 yuan/ton. [5][17] 3.4 Supply - According to Baichuan, it is estimated that the domestic industrial silicon production in December will be 348,700 tons, a year - on - year increase of 4% and a month - on - month decrease of 3.2%. The number of monthly open furnaces decreased by 14 to 243, and the furnace - opening rate decreased by 1.76% to 0.5%. [4][5] 3.5 Demand - In December, the polysilicon production decreased by 0.4 tons to 110,000 tons, a year - on - year increase of 13% and a month - on - month decrease of 3.5%. The DMC production decreased by 13,200 tons to 196,000 tons, a year - on - year decrease of 16.5% and a month - on - month decrease of 6.3%. [4][5] 3.6 Inventory - In terms of the exchange, the overall inventory of industrial silicon in December increased by 17,200 tons to 50,000 tons, and the polysilicon inventory increased by 81,000 tons to 121,000 tons. In terms of social inventory, the overall inventory of industrial silicon in December increased by 7,750 tons to 456,000 tons, including a 2,750 - ton increase in factory inventory to 266,000 tons; Huangpu Port's inventory increased by 2,000 tons to 58,000 tons, Tianjin Port's inventory increased by 1,000 tons to 80,000 tons, and Kunming Port's inventory increased by 2,000 tons to 52,000 tons. The monthly inventory of polysilicon increased by 2.62 tons to 30.8 tons. [4][5]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints - In 2026, the supply - demand situation of industrial silicon will remain loose, with an expected supply growth rate of about 8% and a demand growth rate of about 5%, and the surplus is expected to further expand. For trading strategies, it is recommended to short SI2601 at high prices, buy put options, or adopt an arbitrage strategy of shorting industrial silicon and going long on polysilicon [9]. - In 2026, the supply and demand of polysilicon are expected to increase slightly, continue to improve, and basically reach a balanced state. The recommended strategy is to go long on PS2601 at low prices, buy call options, or adopt an arbitrage strategy of shorting industrial silicon and going long on polysilicon [10]. - The "Short SI2605 + Long PS2605" arbitrage strategy is recommended. When the PS2605 - 5SI2605 spread is in the range of 7500 - 8500, build a position at a ratio of 3 to 1. The reason is that the anti - involution policy is conducive to the spread expansion [43]. Summary by Directory Annual Viewpoint Industrial Silicon - In 2025, the spot and futures prices of industrial silicon showed a pattern of first decline, then rise, and then oscillation. The annual production capacity remained at a high level, with no substantial signs of capacity clearance. In 2026, the supply is expected to remain loose. The demand from polysilicon may decline, while organic silicon and aluminum alloy demand will grow steadily. The cost decreased in 2025, but most silicon plants had limited profit space. The futures inventory is low, while the spot inventory is high. In 2026, the supply is expected to increase by about 8%, and the demand by about 5%, with a continued loose supply - demand pattern [9]. Polysilicon - In 2025, the polysilicon price fluctuated greatly in a "V" shape. The production capacity increased in 2025, but the output decreased significantly due to losses and self - discipline production cuts. In 2026, if the supply - side reform progresses smoothly, the supply may increase slightly with demand. The domestic demand is weak, while the global demand will maintain a moderate growth. The cost decreased slightly in 2025, and the profit improved significantly. The inventory is high. In 2026, the supply and demand are expected to increase slightly and basically reach a balanced state [10]. Cost and Profit - In 2025, the power consumption of industrial silicon decreased, and the prices of raw materials such as silicon coal and electrodes declined, driving the production cost down. The full - cost of industrial silicon in the northwest region is mainly in the range of 7500 - 9000 yuan/ton, and in the southwest region, it is 8500 - 10000 yuan/ton during the wet season and 10000 - 11500 yuan/ton during the dry season, with an overall comprehensive cost of 8000 - 10000 yuan/ton [191]. Industry Chain Diagram - The industrial silicon industry chain involves raw materials such as petroleum coke, charcoal, and silicon ore. Industrial silicon can be processed into organic silicon, polysilicon, and aluminum alloy, which are further used in various fields such as electronics, construction, and photovoltaic [47]. Industry International Situation - In 2025, the global industrial silicon trade pattern was structurally adjusted. China is the largest producer and exporter, with stable export volume but a decline in the export structure. The overseas production cost is high, and the capacity expansion willingness is low. The green certification requirements of multinational enterprises are increasing, which promotes the industry's transformation to low - carbon production. However, the overall green transformation of the industry still faces challenges [50][52][54]. Industry Domestic Situation - In 2025, the industrial silicon production capacity in China shifted westward, with the northwest region becoming the core production area. The domestic photovoltaic demand showed phased fluctuations and structural differentiation. The environmental protection inspection promoted the industry's transformation to low - carbon and intensive development, accelerating the clearance of small and medium - sized production capacities [57][59][61]. Supply - From January to November 2025, the cumulative production of industrial silicon was 3.7 million tons, a year - on - year decrease of 15.39%. The supply pressure was relieved to some extent. In 2026, there is an expectation of supply recovery. The new production capacity in 2025 - 2026 is mainly concentrated in Xinjiang, Yunnan, and other regions, with a total of 1.88 million tons [73][82]. Demand - From January to October 2025, the cumulative actual consumption of industrial silicon was 2.6612 million tons, a year - on - year decrease of 18.26%. Polysilicon, organic silicon, and aluminum alloy are the main downstream consumers, accounting for 50%, 30%, and 16% respectively. In the future, the polysilicon demand may decline, the organic silicon demand is weak, and the aluminum alloy demand will grow steadily but with limited impact on the overall demand [117]. Inventory - The high inventory of industrial silicon has been the main factor suppressing the market. The inventory increased slightly in 2025, and it is expected to continue to increase slightly in 2026. The polysilicon inventory is also high, and the inventory - building situation continues [31][10]. Technical Analysis - In the 2025 market, using the fast - line crossing above the slow - line as a buying signal had an accuracy rate higher than 75%. The fast - line is generally defined as the 5 - day moving average, and the slow - line as the 20, 40, or 60 - day moving average [245].