The Zhitong Finance App learned that on the evening of April 2, 2024, Huachuang Securities released a research report saying that on the evening of April 2, 2024, the General Department of the National Energy Administration officially issued the “Notice on Publicizing Pilot Biodiesel Promotion and Application”, which included 22 biodiesel promotion and application pilot projects in Beijing, including Haidian District, Xiamen City, Zhoushan Free Trade Zone, Shandong Expressway Group, and Guangzhou. This move marks an important step in waste recycling and bioenergy utilization. China's vast domestic demand market for biodiesel is expected to fully open up.
On the upstream raw materials side, we recommend waste oil recycling leaders (holding many kitchen BOT projects+leading oil extraction rate) Shangao Huaneng (000803.SZ) and Junxin Co., Ltd. (301109.SZ), which is expected by merger and acquisition of Renhe Environmental Protection (301109.SZ); Downstream recommends the domestic biodiesel production leader Excellent New Energy (688196.SH), which has second-generation biodiesel technology, and Langkun (300072.SZ); Jiaao Environmental Protection (603822.SH), which has advanced biodiesel and environmentally friendly plasticizers, and the preparation environment (300072.SZ), which has bioenzymatic technology 301305.SZ)
The main views of Huacheng Securities are as follows:
The European Union initiated an anti-dumping investigation, and domestic biodiesel industry exports were blocked.
From 2017 to 2023, China's biodiesel export volume was over 50%, and the export volume reached record highs year after year, reaching 1.95 million tons in 2023. Since April 2023, the EU has launched multiple rounds of investigations against China's biodiesel industry and officially launched anti-dumping investigations on December 20, 2023. Once the dumping issue is confirmed, punitive tariffs will be imposed on biodiesel from China, which reduces the EU's enthusiasm for purchasing biodiesel from China. Among them, 2023H2 was extremely clearly affected by the above survey, and the export volume dropped from 1.052 million tons in 2022 H2 to 775,300 tons. From January to February 2024, China's biodiesel exports fell sharply to 239,000 tons from 455,000 tons in the same period last year. The performance of listed companies such as Excellent New Energy is under pressure.
China currently has no mandatory blending ratio policy for biodiesel, so the apparent demand is low.
China's biodiesel industry started later than abroad. Although the country has introduced a number of policies to support the development of the biodiesel industry, there are many qualitative statements, and no relevant policies on mandatory blending ratios have been introduced. This has caused China's apparent demand for biodiesel to operate at a low level all year round. Although it has broken through one million tonnes in 2023, it is still far from the EU's demand in the 10 million tonnage range.
The announcement of the pilot list boosted industry confidence.
In the second half of 2023, due to EU sanctions, China's pace of expanding domestic demand for biodiesel accelerated markedly. On September 26, the National Energy Administration held a pilot work site meeting on the promotion and application of biodiesel in Shanghai. On November 13, the National Energy Administration issued the “Notice on Organizing and Carrying Out Pilot Demonstrations for the Promotion and Application of Biodiesel”. On the evening of April 2, 2024, the General Department of the National Energy Administration officially issued the “Notice on Publicizing Biodiesel Promotion and Application Pilot Projects”, which included 22 biodiesel promotion and application pilot projects in Beijing, including Haidian District, Xiamen City, Zhoushan Free Trade Zone, Shandong Expressway Group, and Guangzhou. This move marks that China has taken important steps in waste recycling and bioenergy utilization, and China's vast domestic demand market for biodiesel is expected to fully open up.
Under optimistic circumstances, the long-term demand for pilot cities and 2030 is 100,000 to 200,000 tons and 3.8 million tons, respectively.
As for the pilot requirements, the Shanghai pilot currently consumes an average of 80 tons of biodiesel per day, which is equivalent to the total demand for 30,000 tons throughout the year. However, considering the varying levels of economic development in various regions and the existence of the company's pilot project, it is estimated that the average annual demand for this pilot is 5,000 to 10,000 tons/year, with a total volume of about 100,000 to 200,000 tons. Long-term demand. According to the assumption that China's mandatory blending target usage ratio for biodiesel in 2030 is 5%, the demand for biodiesel in that year is expected to reach 3.8 million tons, 1-3 times the apparent demand in 2023.
Risk warning:
The risk of price fluctuations in commodities such as crude oil and grain, falling short of expectations in implementing related policies, exchange rate risks, and increased market competition.