Core Insights - The third China International Supply Chain Promotion Expo concluded with 102 companies signing intentions for the next expo, indicating strong interest in China's market and supply chain collaboration [2] - Honeywell emphasizes its commitment to China as a core engine for innovation and development, showcasing its local R&D efforts at the expo [2][3] Company Highlights - Honeywell's sustainable aviation fuel (SAF) solution is crucial for the sustainable development of the aviation industry, which is a significant part of the modern supply chain [3] - The SAF can reduce greenhouse gas (GHG) emissions by up to 80% compared to fossil fuels, and Honeywell has been a pioneer in commercializing SAF since 2016 [3][4] - The current market demand for aviation fuel is approximately 400 million tons per day, and if 25% is replaced with SAF, it could represent a trillion-dollar industry [4]

Investment Rating - The investment rating for the company is upgraded to "Buy" with a target price indicating a potential return of over 20% within the next six months [7][19]. Core Insights - The company is expected to achieve significant growth in its financial performance, with a forecasted net profit of 0.4-0.45 billion yuan for the first half of 2025, representing an increase of 214.28%-228.56% year-on-year [1][2]. - The increase in demand for Sustainable Aviation Fuel (SAF) is driving up the price of Used Cooking Oil (UCO), which is a key raw material for the company [3][4]. - The company has a strong order book, with many well-known domestic and international biofuel companies inquiring about orders, indicating robust market demand [4]. Financial Performance - For Q1 2025, the company reported a net profit of 0.28 billion yuan, a year-on-year increase of 222.23%. The projected net profit for Q2 2025 is estimated to be between 0.12-0.17 billion yuan, marking a turnaround from a loss of 0.44 billion yuan in the same period last year [2]. - The company's revenue projections for 2025-2027 are 14.11 billion yuan, 16.51 billion yuan, and 18.88 billion yuan, respectively, with a year-on-year growth of -2.62%, 17%, and 14.36% [4][6]. - The forecasted net profit for 2025 is 1.00 billion yuan, with significant growth rates of 668.27%, 57.94%, and 39.45% for the following years [4][6]. Market Dynamics - The demand for SAF is expected to increase significantly due to new regulations in the EU and UK, which will require a 2% blending of SAF starting January 2025, potentially leading to an additional demand of approximately 1.8 million tons of UCO [3]. - The Chinese government is actively supporting the development of biofuels, which is expected to further boost domestic SAF demand during the 14th Five-Year Plan period [3][4].

1. Report Industry Investment Ratings No industry investment ratings are provided in the report. 2. Core Views - Palm oil: The fundamental contradictions are not obvious, and it is greatly affected by international oil prices [2][4]. - Soybean oil: There is insufficient speculation on US soybean weather, lacking driving forces [2][4]. - Soybean meal: Due to trade concerns and the decline of US soybeans, Dalian soybean meal may fluctuate weakly [2][15]. - Soybean: Affected by the weak atmosphere in the surrounding market, the market may fluctuate weakly [2][15]. - Corn: It will fluctuate weakly [2][18]. - Sugar: It will be range - bound [2][21]. - Cotton: Attention should be paid to US tariff policies and their impacts [2][24]. - Eggs: The expectations are running ahead, and the reality is following [2][28]. - Live pigs: Attention should be paid to the sentiment of the new round of speculative realization [2][30]. - Peanuts: There is support at the bottom [2][35]. 3. Summary by Related Catalogs 3.1 Palm Oil, Soybean Oil, and Rapeseed Oil - **Fundamental Data**: Palm oil's daily - session closing price was 8,466 yuan/ton with a - 0.07% change, and the night - session closing price was 8,482 yuan/ton with a 0.19% change. Soybean oil's daily - session closing price was 7,894 yuan/ton with a - 0.63% change, and the night - session closing price was 7,870 yuan/ton with a - 0.30% change. Rapeseed oil's daily - session closing price was 9,548 yuan/ton with a - 0.61% change, and the night - session closing price was 9,492 yuan/ton with a - 0.59% change [4]. - **Macro and Industry News**: From July 1 - 5, Malaysia's palm oil exports were 213,055 tons, a 31.59% increase from the same period last month. Indian officials called for an increase in palm oil import tariffs and a minimum guaranteed price. Up to 500 million tons of palm - based residues and biomass in Southeast Asia can be used to produce sustainable aviation fuel [5][8]. - **Trend Intensity**: The trend intensity of palm oil and soybean oil is 0 [13]. 3.2 Soybean Meal and Soybean - **Fundamental Data**: DCE soybean 2509's daily - session closing price was 4079 yuan/ton with a - 54 (- 1.31%) change, and the night - session closing price was 4073 yuan/ton with a - 18 (- 0.44%) change. DCE soybean meal 2509's daily - session closing price was 2937 yuan/ton with a - 25 (- 0.84%) change, and the night - session closing price was 2933 yuan/ton with a - 15 (- 0.51%) change [15]. - **Macro and Industry News**: As of July 6, 2025, the good - to - excellent rate of US soybeans was 66%, the same as expected and the previous week, and lower than 68% in the same period last year. Brazil exported 1,917,950.97 tons of soybeans in the first week of July. Argentina will export 30,000 tons of soybean meal to China for the first time. On July 7, CBOT soybean futures closed at a two - week low due to favorable weather in the US Midwest and trade concerns [9][15][17]. - **Trend Intensity**: The trend intensity of soybean meal and soybean is - 1 (only referring to the price fluctuations of the main - contract futures on the day - session of the reporting day) [17]. 3.3 Corn - **Fundamental Data**: The closing price of C2509 was 2,326 yuan/ton with a - 1.36% change, and the night - session closing price was 2,321 yuan/ton with a - 0.21% change. The closing price of C2511 was 2,283 yuan/ton with a - 0.91% change, and the night - session closing price was 2,378 yuan/ton with a 4.16% change [18]. - **Macro and Industry News**: The northern corn collection and port prices remained stable, while the prices in Northeast China and North China mostly declined. The prices of imported sorghum and barley were also reported [19]. - **Trend Intensity**: The trend intensity of corn is 0 [20]. 3.4 Sugar - **Fundamental Data**: The raw sugar price was 16.25 cents/pound with a - 0.12 change. The mainstream spot price was 6050 yuan/ton with a - 20 change. The futures main - contract price was 5754 yuan/ton with a - 15 change [21]. - **Macro and Industry News**: Pakistan approved the import of 500,000 tons of sugar. Brazil's exports in June increased by 5% year - on - year. China imported 350,000 tons of sugar in May. CAOC estimated the domestic sugar production, consumption, and import volume for the 24/25 and 25/26 seasons. ISO estimated a global sugar supply shortage of 5.47 million tons in the 24/25 season [21][22]. - **Trend Intensity**: The trend intensity of sugar is 0 [23]. 3.5 Cotton - **Fundamental Data**: The closing price of CF2509 was 13,760 yuan/ton with a - 0.15% change, and the night - session closing price was 13720 yuan/ton with a - 0.29% change. The closing price of CY2509 was 19,955 yuan/ton with a - 0.22% change, and the night - session closing price was 19910 yuan/ton with a - 0.23% change [24]. - **Macro and Industry News**: The cotton spot trading was mostly sluggish, and the cotton yarn market was still dull. ICE cotton futures fell nearly 1% due to concerns about US tariff policies and good growth conditions of US cotton [25]. - **Trend Intensity**: The trend intensity of cotton is 0 [27]. 3.6 Eggs - **Fundamental Data**: The closing price of eggs 2508 was 3,449 yuan/500 kilograms with a - 3.74% change. The closing price of eggs 2510 was 3,360 yuan/500 kilograms with a - 1.81% change [28]. - **Trend Intensity**: The trend intensity of eggs is 0 [28]. 3.7 Live Pigs - **Fundamental Data**: The Henan spot price was 14980 yuan/ton with a - 200 change. The futures price of live pigs 2509 was 14245 yuan/ton with a - 60 change [31]. - **Market Logic**: The current market has entered the expected trading stage. The expected state reserve purchase has driven the formation of a policy - bottom sentiment. The consistent bullish expectation from July to August has driven the near - end sentiment. The spot price has continued to strengthen, and the futures market has repaired the basis. However, the futures price has offered hedging profits, increasing the game. The large number of piglets sold by group farms in the first quarter will start to be slaughtered in July. Attention should be paid to the subsequent spot performance. The support level of the LH2509 contract is 13,000 yuan/ton, and the resistance level is 14,500 yuan/ton [33]. - **Trend Intensity**: The trend intensity of live pigs is 0 [32]. 3.8 Peanuts - **Fundamental Data**: The price of Liaoning 308 common peanuts was 9,000 yuan/ton with a - 100 change. The closing price of PK510 was 8,098 yuan/ton with a - 1.46% change [35]. - **Spot Market Focus**: The remaining peanuts in the production areas are almost exhausted, and most are selling inventory. The prices in some white - sand peanut production areas are weakly stable, and the prices in large - peanut production areas are stable [36]. - **Trend Intensity**: The trend intensity of peanuts is 0 [37].

1. Report Industry Investment Ratings No investment ratings are provided in the reports. 2. Core Views of the Reports 2.1 Oils and Fats - Palm oil: With the release of MPOA production data and potential inventory decline at the end of the month, crude palm oil futures may break through previous highs. However, due to the expected seasonal increase in July production, beware of the risk of price pull - back around the MPOB report. The domestic Dalian palm oil futures market may continue to rise in the short - term [1]. - Soybean oil: The US Senate passed a fiscal spending bill including 45Z tax credits, which is expected to boost soybean oil consumption if passed by the House and signed by the President. Domestically, high factory operating rates have increased inventory, but the selling pressure on oil mills is not large, and the decline is expected to be limited [1]. 2.2 Corn - The current corn price is stable but lacks upward momentum due to continuous import auctions. In the medium - term, supply is tight, imports are low, and consumption is increasing, which may support price increases. Short - term operations are recommended, paying attention to policy auctions [3][5]. 2.3 Meal - US soybeans have strengthened technical support and rebounded. Brazilian soybean prices are rising. Currently, domestic soybean and soybean meal inventories are rising, but there is no significant inventory pressure on soybean meal. The supply is expected to be high, and attention should be paid to demand [6]. 2.4 Pork - The spot price of live pigs is oscillating strongly. The market is expected to be strong in the short - term, but the pressure on the 09 contract is increasing, and attention should be paid to the pressure above 14,500 [9]. 2.5 Sugar - The increase in the ethanol blending ratio in Brazilian gasoline has supported the rebound of raw sugar prices, but the global supply is loose, and the rebound is limited. Domestically, the market sentiment is positive, but considering future imports, the market may turn bearish after the rebound [12]. 2.6 Cotton - The short - term supply of old - crop cotton is tight, but the long - term supply is sufficient. The downstream industry is weakening, and the demand is weak. Cotton prices are expected to fluctuate within a range [14]. 2.7 Eggs - The supply of eggs is sufficient, demand is average, and downstream procurement is cautious. Egg prices are expected to be stable first, decline slightly in the short - term, and then stabilize [15]. 3. Summary by Related Catalogs 3.1 Oils and Fats - **Prices**: On July 3, the spot price of Jiangsu first - grade soybean oil was 8,290 yuan/ton, up 0.36% from the previous day; the futures price of Y2509 was 7,994 yuan/ton, down 0.30%. The spot price of Guangdong 24 - degree palm oil was 8,560 yuan/ton, up 1.18%; the futures price of P2509 was 8,478 yuan/ton, up 0.45%. The spot price of Jiangsu fourth - grade rapeseed oil was 9,830 yuan/ton, up 1.03%; the futures price of O1509 was 9,618 yuan/ton, unchanged [1]. - **Spreads**: The soybean oil 09 - 01 spread was 20 yuan/ton, down 54.55%; the palm oil 09 - 01 spread was 0 yuan/ton, up 100.00%; the rapeseed oil 09 - 01 spread was 65 yuan/ton, up 6.15% [1]. 3.2 Corn - **Prices**: On July 3, the futures price of corn 2509 was 2,363 yuan/ton, unchanged; the futures price of corn starch 2509 was 2,731 yuan/ton, unchanged [3]. - **Market situation**: In the Northeast, the remaining grain is scarce, and prices are firm; in North China, the shipment volume has increased slightly, and deep - processing prices are stable with partial declines. The overall demand is resilient, but wheat substitution limits price increases [3]. 3.3 Meal - **Prices**: On July 3, the spot price of Jiangsu soybean meal was 2,840 yuan/ton, unchanged; the futures price of M2509 was 2,958 yuan/ton, up 0.48%. The spot price of Jiangsu rapeseed meal was 2,500 yuan/ton, up 1.21%; the futures price of RM2509 was 2,601 yuan/ton, up 0.89% [6]. - **Market situation**: US soybean prices have rebounded, and Brazilian soybean prices are rising. Domestic soybean and soybean meal inventories are rising, and the supply is expected to be high [6]. 3.4 Pork - **Prices**: On July 3, the futures price of the main live - pig contract was 830 yuan/ton, up 9.21%. The spot price in Henan was 15,200 yuan/ton, up 100 yuan/ton [9]. - **Market situation**: The inventory of secondary - fattened pigs is increasing, the slaughter procurement is more difficult, and the spot price is rising. The market sentiment is positive in the short - term, but the pressure on the 09 contract is increasing [9]. 3.5 Sugar - **Prices**: On July 3, the futures price of sugar 2601 was 5,576 yuan/ton, down 0.07%; the futures price of sugar 2509 was 5,767 yuan/ton, up 0.02%. The ICE raw sugar main contract was 16.37 cents/pound, up 5.21% [12]. - **Industry situation**: The national sugar production and sales have increased year - on - year, and the inventory has decreased [12]. 3.6 Cotton - **Prices**: On July 3, the futures price of cotton 2509 was 13,785 yuan/ton, down 0.14%; the futures price of cotton 2601 was 13,785 yuan/ton, down 0.25%. The ICE US cotton main contract was 68.43 cents/pound, down 0.31% [14]. - **Industry situation**: The inventory in the north is decreasing, the industrial inventory is slightly down, and the import volume has decreased. The downstream inventory is increasing, and the processing profit is decreasing [14]. 3.7 Eggs - **Prices**: On July 3, the futures price of the egg 09 contract was 3,690 yuan/500KG, up 0.33%; the futures price of the egg 08 contract was 3,565 yuan/500KG, up 0.59%. The egg - producing area price was 2.60 yuan/jin, unchanged [15]. - **Market situation**: The supply of eggs is sufficient, demand is average, and prices are expected to be stable with a slight decline in the short - term [15].

Core Insights - The report highlights the significant increase in demand for sustainable aviation fuel (SAF) due to the European Union's proposed subsidies, which could enhance SAF procurement by airlines [5][6] - The establishment of a new subsidiary by the company in Shandong is aimed at improving market access and service efficiency, indicating a strategic expansion in response to regional demand [7] Market Performance - The new materials sector saw a weekly increase of 5.12%, with specific sub-sectors like battery chemicals rising by 9.13% and semiconductor materials by 4.09% [5] - The report provides a detailed weekly price tracking of various chemical raw materials, indicating stability in prices for several products while noting slight declines in vitamins [5] Investment Recommendations - The report suggests focusing on companies like Jiaao Environmental Protection and Zhuoyue New Energy, which are positioned to benefit from the rising SAF demand and have ongoing projects in biofuels [5][6] - The company is projected to achieve significant revenue growth from 2025 to 2027, with expected revenues of 10.55 billion, 12.85 billion, and 15.39 billion yuan, reflecting a compound annual growth rate of approximately 21.8% [7]

Summary of Conference Call on UCO Industry and Company Insights Industry Overview - The UCO (Used Cooking Oil) market is driven by carbon attributes and green premiums, with prices currently around 7,700-7,800 RMB/ton, reflecting a 500-600 RMB increase since early June [2][5][25] - The market dynamics have shifted due to mandatory bio-jet fuel (SAF) blending policies in Europe and the commissioning of large domestic plants, enhancing the bargaining power of domestic producers [2][5] - The annual production of UCO from regulated kitchen waste treatment plants in China is approximately 800,000 to 900,000 tons, with slow capacity expansion due to strict project approvals [2][3][8] Company Positioning - The company specializes in kitchen organic waste treatment and UCO resource utilization, processing about 4,700-4,800 tons of waste daily with a design capacity of 5,400 tons, achieving an 88% utilization rate [3] - The company’s UCO production is around 90,000 tons annually, positioning it as a leader in the domestic UCO sector [3] Market Dynamics - UCO pricing has been influenced by the European SAF blending mandate, which requires a 2% addition by 2025, leading to increased domestic demand [5][17] - The company’s UCO sales have transitioned from international clients to domestic SAF producers, with major clients including Hai Xin Neng Ke and He Nan Jun Heng [11][12] Production and Supply Chain - UCO is categorized into several types based on quality, with the highest quality sourced from kitchen waste treatment plants, followed by mixed oils and lower-quality oils like gutter oil [9][10] - The company plans to expand its UCO production capacity to 200,000 tons annually through acquisitions and projects like "urban oil fields," targeting a daily processing capacity of 8,000 to 10,000 tons [4][15][16] Regulatory Environment - The UCO industry faces significant regulatory hurdles, with project approvals requiring local government consent and operational experience, limiting the emergence of new large-scale producers [8][9] Future Outlook - The demand for UCO is expected to grow, particularly with European policies mandating higher SAF blending ratios, which could lead to a supply shortage if domestic production does not keep pace [21][22] - The company anticipates a substantial improvement in performance in 2025, driven by cost reductions and increased oil extraction rates, with a focus on monitoring oil price fluctuations [25] Key Risks and Considerations - Oil price fluctuations significantly impact profitability, with a 1,000 RMB increase in oil prices affecting profits by approximately 90 million RMB [25] - The company is advised to keep an eye on UCO price trends and the prices of palm oil and rapeseed oil, as they are closely linked to UCO pricing [25]

Group 1: SAF Market Insights - The SAF market is transitioning to a supply-demand negotiation phase, with production capacity expansion slowing down and effective utilization rates increasing due to market price fluctuations [2] - The EU's 2025 2% SAF blending policy is expected to drive SAF demand growth, leading to potential price increases for SAF and UCO [2] - By 2025, Europe is projected to purchase 1 million tons of SAF at an estimated cost of $1.2 billion, with compliance costs potentially adding an extra $1.7 billion, effectively doubling the procurement cost for European airlines [3] Group 2: Company SAF Project Status - The company's SAF project is progressing steadily through technological upgrades, production optimization, and diversified sales channels, aligning with the company's strategic direction [4] - The SAF industry exhibits cyclical volatility, making market price fluctuations a critical factor for corporate adjustments [4] Group 3: SEED Water Treatment Technology - The SEED water treatment technology demonstrates significant competitive advantages in investment, operational costs, land use, construction time, and carbon emissions compared to traditional water treatment plants [5] - Innovations include the use of special steel structures, factory-prefabricated modules, and advanced integrated processing techniques, resulting in over 70% reduction in carbon emissions and more than 50% savings in construction time [5][6] Group 4: Market Expansion and Project Development - The company has accelerated project implementation, securing contracts in Xinjiang, Henan, and Beijing for municipal water supply and wastewater treatment, marking a significant expansion of SEED technology into the broader water sector [6] - The company aims to sign 10 new SEED-related contracts in 2025, indicating a robust order reserve and a shift from "engineering-driven" to "product-driven" approaches in the wastewater treatment industry [7]

Core Viewpoint - The report highlights the rising prices of HVO and SAF in Europe due to strong seasonal demand, which is expected to drive up UCO prices in China as well [1][2]. Group 1: HVO/SAF Price Trends - As of June 11, 2025, the prices for HVO and SAF in Europe are $2,002 and $1,949 per ton, reflecting increases of 13.97% and 11.60% respectively from their lowest points in Q2 2025 [1][2]. - The increase in SAF demand is attributed to the strong seasonal demand ahead of the summer flight season in Europe, with high-quality HVO experiencing a larger price increase [1][2]. Group 2: UCO Price Dynamics - In China, as of June 12, 2025, the prices for gutter oil and waste oil in East China are 6,250 and 6,650 RMB per ton, showing increases of 3.31% and 2.31% respectively from their lowest points in Q2 2025 [2]. - The rising demand for HVO and SAF overseas has led to increased inquiries for UCO in Chinese ports, resulting in a price increase for UCO [2]. Group 3: EU SAF Policy and Cost Implications - The EU is gradually implementing a 2% SAF blending policy, with measures such as an environmental surcharge of 6-20 euros being introduced by some airlines to cover the costs associated with SAF blending [3]. - Despite these measures, the compliance costs for using SAF in Europe remain high, with an estimated total cost of $12 billion for purchasing 1 million tons of SAF by 2025, potentially doubling the procurement costs for airlines [3]. Group 4: Future Demand for UCO - The demand for SAF is expected to grow steadily, which will likely increase the demand for UCO as EU end-user demand recovers and SAF production facilities continue to actively procure raw materials [4]. - The price of UCO is influenced by the procurement levels of HVO and SAF plants, with a notable increase in UCO demand observed since 2025 due to its strong carbon reduction attributes [5].

News Summary Core Viewpoint - The demand for sustainable aviation fuel remains strong, while the supply and demand dynamics for fuel oil are showing signs of weakness, particularly in the low-sulfur segment, influenced by various regional factors and geopolitical events [1][2][3]. Group 1: Market Dynamics - As of June 3, the Shanghai Futures Exchange reported a decrease of 2,000 tons in low-sulfur fuel oil warehouse receipts, totaling 25,000 tons, while fuel oil warehouse receipts remained stable at 28,950 tons [1]. - The International Air Transport Association (IATA) signals a strong ongoing demand for sustainable aviation fuel [1]. - Japan's commercial aviation fuel inventory increased to 878,300 kiloliters, up from 821,100 kiloliters, while commercial kerosene and diesel inventories also saw increases [1]. Group 2: Institutional Insights - According to Guotou Anxin Futures, the demand for high-sulfur fuel oil remains relatively weak, with expectations that summer electricity demand in the Middle East and North Africa will not significantly boost consumption due to lower temperature forecasts [2]. - The supply side saw a 42% increase in Russian fuel oil shipments to Asia, totaling 2.45 million tons, amid expectations of increased supply from OPEC+ [2]. - Fujairah's low-sulfur fuel oil bunkering volumes have significantly decreased, indicating a weakening demand as the peak season for marine fuel approaches its end [2]. Group 3: Economic Outlook - Current market sentiment suggests a slight improvement in the global economy, with expectations of increased gasoline demand due to the summer travel peak in the U.S. [3]. - Geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, are raising oil prices due to increased geopolitical risk premiums [3]. - The demand for fuel oil is expected to strengthen as South Asia and the Middle East enter their peak electricity demand season, with Egypt's recent high-sulfur fuel oil procurement tenders providing a boost [3].

Core Insights - The aviation industry is responsible for approximately 99% of its carbon emissions from fuel consumption during flights, and the adoption of Sustainable Aviation Fuel (SAF) is seen as a key pathway to decarbonization, potentially reducing carbon emissions by 80% over its lifecycle [1][4][11] - The Chinese Civil Aviation Administration has initiated a pilot program for SAF, mandating a 1% blend of SAF in domestic flights from specific airports starting March 19, 2025 [1][8] - The global aviation industry aims for net-zero carbon emissions by 2050, with SAF expected to contribute significantly to this goal, accounting for 65% of the necessary reductions [2][4] Industry Developments - SAF is currently priced at about five times that of conventional aviation fuel, which poses a challenge for airlines in its adoption [4][6] - Airbus has been proactive in using SAF, consuming over 14 million liters in 2024, which accounted for 16% of its total fuel usage, thereby avoiding nearly 35 million tons of CO2 emissions [5] - The International Air Transport Association (IATA) projects that SAF will only represent 0.3% of commercial aviation fuel consumption in 2024, significantly lower than earlier estimates [4][6] Policy and Regulation - The European Union has set mandatory SAF blending targets, requiring 2% by 2025, 6% by 2030, and 70% by 2050, which has stimulated demand [6][7] - China's "14th Five-Year" green development plan aims for a SAF consumption of over 20,000 tons in 2025, which would represent about 0.2% of the annual aviation kerosene consumption [7][8] Market Potential in China - China has a diverse range of raw materials for SAF production, including waste oils and agricultural residues, with potential annual production capacity reaching 12 million tons by 2030 [11][12] - The country is the largest market for renewable energy, which can significantly reduce the energy costs associated with SAF production [11][12] - The strong manufacturing capabilities and engineering execution in China are expected to facilitate the rapid development of the SAF industry [12][13]