Summary of Conference Call on SAF and Biodiesel Market Industry Overview - The conference call focused on the Sustainable Aviation Fuel (SAF) and biodiesel market, particularly in Europe and China [1][2][3]. Key Points and Arguments 1. **Price Increase of SAF and HVO** - European FOB high-end price for aviation kerosene has risen to $2,860 per ton, marking a 51% increase year-to-date [1][2]. - The increase is attributed to rising HVO prices, which have led to a tighter SAF supply, and seasonal production adjustments in Europe [2]. 2. **Government Support for Biodiesel** - The Chinese Ministry of Commerce has proposed support for domestic biodiesel and marine fuel blending operations, which could significantly increase domestic biodiesel blending volumes if a 24% blending ratio is assumed [1][3]. - This policy is expected to create a substantial market increment for biodiesel in China [3]. 3. **EU Carbon Emission Regulations** - Starting January 1, 2024, the EU will include ship carbon emissions in its carbon market, with a full 100% carbon emission requirement for ships entering Europe from 2026 [1][4]. - This regulation is anticipated to further stimulate demand for biodiesel [4]. 4. **Market Demand and Supply Dynamics** - As of November 8, 2025, China has approved 11.06 million tons of biodiesel export licenses, with European SAF demand expected to rise to a 2% blending ratio, leading to a total demand nearing 1 million tons [1][5]. - The price gap between products and raw materials is widening, suggesting continued profitability for SaaS companies in Q4 [5]. 5. **Company Performance and Capacity Expansion** - 卓越新能 (Zhuoyue New Energy) has stable performance in the biodiesel sector, with production capacities of 200,000 tons in Singapore and 300,000 tons in Thailand, and plans to expand HVO capacity to 100,000 tons [1][6]. - 优蔻 (UCO) has seen a decline in export volume due to the cancellation of export tax rebates but remains competitive due to its high emission reduction efficiency [1][7]. - The export price for UCO has increased by 18.5% year-on-year, although this increase is less than that of downstream products [7]. Recommendations - The companies recommended for investment include 卓越新能 (Zhuoyue New Energy), 山高环能 (Shangao Environmental), and 嘉澳环保 (Jiaao Environmental), all of which have leading positions in their respective fields and significant growth potential [1][8].

Core Insights - Ezhou Huahu Airport's annual aviation fuel consumption has surpassed 300,000 tons for the first time, indicating a significant increase in demand due to enhanced international cargo routes and increased night flights [1] Group 1: Company Performance - Sinopec's local enterprises, Zhonghan Petrochemical and Sales Central China Company, have successfully established a collaborative supply guarantee system to meet the rising aviation fuel demand [1] - Zhonghan Petrochemical has optimized production processes to improve aviation fuel yield and has enhanced transportation efficiency through a waterway shipping system [1] Group 2: Operational Achievements - In July, the volume of fuel supplied to the airport increased by 150% month-on-month, showcasing the effectiveness of tailored supply strategies [1] - From January to October, the operational efficiency generated a profit of 150 million yuan for the Sales Central China Company [1]

Group 1 - The eighth China International Import Expo is held in Shanghai from November 5 to 10, with Gaoqiao Petrochemical prioritizing safety and environmental protection during this period [1] - Gaoqiao Petrochemical implements comprehensive monitoring of volatile organic compounds (VOCs) and ensures compliance with environmental standards for emissions [1] - The company enhances monitoring of key equipment and operational conditions in production units to ensure stable operations [1] Group 2 - During the expo, Gaoqiao Petrochemical guarantees the supply of high-quality gasoline and diesel, as well as coordinated transportation of aviation fuel to Hongqiao and Pudong airports [1] - The company optimizes inventory to meet market demand changes and ensures safe logistics transportation to minimize environmental impact [1] - Gaoqiao Petrochemical takes multiple measures to maintain safety standards and improve the quality of the expo [1] Group 3 - On October 30, Gaoqiao Petrochemical increases the frequency of key pump inspections at the sulfur environmental protection unit to ensure stable operation [3]

Core Viewpoint - China Petroleum & Chemical Corporation (Sinopec) reported a decline in revenue and net profit for the first three quarters of 2025, primarily due to falling oil and gas prices [1] Financial Performance - Total revenue for the first three quarters was 2.1 trillion yuan, a year-on-year decrease of 10.7% [1] - Net profit attributable to shareholders was 29.98 billion yuan, down 32.2% year-on-year [1] - Operating cash flow net amount was 114.78 billion yuan, an increase of 13% year-on-year [1] - In Q3 alone, revenue was 704.39 billion yuan, a decline of 10.9% year-on-year, while net profit was 8.5 billion yuan, down 0.5% [1] Business Segment Performance - The chemical segment was the only loss-making sector, with an EBITDA loss of 8.22 billion yuan [2] - In exploration and development, oil and gas equivalent production reached 394.48 million barrels, a 2.2% increase year-on-year, with a profit of 38.08 billion yuan [2] - The refining segment processed 186 million tons of crude oil, producing 11 million tons of refined oil, with an EBITDA of 7 billion yuan [2] Capital Expenditure - Total capital expenditure for the first three quarters was 71.6 billion yuan, focused on capacity building and technological upgrades [3] - Capital expenditure in exploration and development was 41.6 billion yuan, while refining accounted for 10.6 billion yuan [3] - The marketing and distribution segment had a capital expenditure of 5.5 billion yuan, and the chemical segment accounted for 12.9 billion yuan [3]

Core Viewpoint - China Petroleum & Chemical Corporation (Sinopec) reported a decline in revenue and net profit for the first three quarters of 2025, primarily due to falling crude oil and product prices, leading to reduced inventory profits and lower sales volumes of gasoline and diesel [1] Financial Performance - The operating revenue for the first three quarters was 2,113.441 billion yuan, a year-on-year decrease of 10.7% [1] - The net profit attributable to shareholders was 29.984 billion yuan, reflecting a year-on-year decline of 32.2% [1] - Basic earnings per share were reported at 0.247 yuan [1] Contributing Factors - The decrease in net profit was mainly attributed to the continuous decline in crude oil and product prices, which negatively impacted inventory profits [1] - Domestic sales volumes of gasoline and diesel experienced a downturn [1] - The gross profit margins for aviation fuel, aromatics, and other products also saw a decline [1]

Core Viewpoint - The company's Q3 2025 performance is in line with expectations, showing a significant increase in net profit despite a decline in revenue [1] Financial Performance - Q3 2025 revenue was 19.36 billion yuan, a year-on-year decrease of 14% - Net profit attributable to shareholders was 30 million yuan, a year-on-year increase of 362%, marking a turnaround from previous losses - Non-recurring net profit was 50 million yuan - For the first nine months of 2025, revenue totaled 58.9 billion yuan, with a net loss of 430 million yuan - Asset impairment losses for the first nine months were 417 million yuan, primarily due to inventory impairment [1] Industry Trends - The chemical cycle is still awaiting recovery, with polyethylene and polypropylene sales increasing by 5% year-on-year to 710,000 tons in the first nine months of 2025 - Q3 2025 sales for these products rose by 9% year-on-year to 250,000 tons, although industry price spreads remain low - The naphtha cracking margin in Q3 2025 decreased by 15% year-on-year to 221 USD/ton, and ethylene prices fell by 4% year-on-year to 831 USD/ton, indicating that product margins may take time to recover - Adjustments in refined oil structure show slight recovery in diesel sales, with total sales of diesel, gasoline, and aviation kerosene at 1.79 million tons, 2.47 million tons, and 1.03 million tons respectively for the first nine months of 2025 - The ethylene upgrading project in Shanghai is progressing well, expected to be operational by 2028, which may lead to a turning point in the industry post-2027 due to potential constraints on new capacity approvals [2] Profit Forecast and Valuation - Due to lower-than-expected chemical price spreads, the company has revised down its net profit forecasts for 2025 and 2026 by 86% and 40% to 50 million yuan and 390 million yuan respectively - The valuation remains unchanged, with target prices set at 3.3 yuan for A-shares and 1.6 HKD for H-shares, indicating potential upside of 17% and 14% - Current trading levels are at 1.2x and 0.5x P/B for 2025/26 for A and H shares respectively [3]

Core Insights - Jilin Petrochemical Refinery achieved a record crude oil processing of 7.363 million tons in the first three quarters of the year, generating a profit increase of 255 million yuan through optimization, technological upgrades, and product enhancements [1] Group 1: Incremental Efficiency - The refinery implemented a holistic approach to optimize the entire production chain, breaking down barriers in supply, production, sales, storage, and transportation to maximize the value of every drop of crude oil [2] - A cross-functional team was established to focus on the balance of waxy oil, achieving 100% internal consumption of heavy and low-quality waxy oils, which previously required external sales [2] - The refinery adjusted its production load in response to market demand fluctuations, producing 1.556 million tons of gasoline and 2.352 million tons of diesel from January to September [2] Group 2: Technological Upgrades - The refinery's online optimization blending system for gasoline was enhanced, increasing its usage rate from 23% to 52.2% and achieving a blending qualification rate of 97.8% [3] - A team discovered that new catalysts increased reaction temperatures significantly, leading to a reduction in fuel gas consumption from 630 cubic meters to 350 cubic meters per hour, saving 3.5 million yuan annually [4] - The refinery optimized heat feed across 11 units, increasing the heat feed ratio from 59.1% to 76.8%, saving over 70,000 yuan monthly [5] Group 3: Specialty Product Development - The refinery focused on product structure adjustments, successfully upgrading petroleum coke quality from grade 2B to 2A, enhancing both quality and profitability [6] - The development of high-value products, such as aviation kerosene, achieved certification and rapid market entry, contributing significantly to the refinery's profit increase [7] - The aromatics unit exceeded production targets for pure benzene and ortho-xylene through raw material optimization and reaction depth adjustments, supporting the refinery's overall profitability [7]

Core Viewpoint - Guangdong Petrochemical has successfully trial-produced three new product grades in full-density polyethylene, high-density polyethylene, and polypropylene, showcasing its commitment to developing high-quality products and overcoming technical challenges since its inception nearly three years ago [1] Group 1: Export Market Expansion - Guangdong Petrochemical has exported over 2 million tons of various products to more than 10 countries and regions, including Europe, Australia, and Japan, achieving a product qualification rate of 100% [3] - The company has optimized its refining processes to meet international standards, successfully increasing the smoke point of aviation kerosene from 22 mm to over 26 mm and achieving a corrosion level below 0 [3][4] Group 2: Aromatics Production and Purity - The aromatics unit at Guangdong Petrochemical has maintained a paraxylene purity of over 99.75%, significantly exceeding international standards, and has implemented various optimizations to enhance operational efficiency [4][5] - The company has reduced the circulation of ineffective materials and improved energy efficiency, with comprehensive energy consumption far below industry benchmarks [4] Group 3: New Product Development - Guangdong Petrochemical has completed over 230 production transitions across its four polyethylene units, focusing on new product development [7] - The company successfully trial-produced three new grades in one week, including a high-strength polyethylene suitable for dairy packaging, enhancing product value [7][8] - A total of 20 new high-efficiency materials have been developed, with total new product output exceeding 1.7 million tons, leading the industry in both variety and volume among Chinese petroleum refining enterprises [8]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The current core contradiction in the crude oil market is the mismatch between short - term geopolitical (Russia - Ukraine conflict, Yemen situation) driven bullish momentum and insufficient medium - to - long - term fundamental support (no supply - demand gap, weak physical goods). Geopolitics is the current focus, but fundamentals restrict price increases [2]. - In the short term, the contradiction focuses on "whether geopolitical risks can continue" and "how the market digests overbought conditions". In the medium - to - long term, the core game lies in "the extent of demand decline" and "the intensity of supply adjustment" [2]. - The market is expected to have a short - term rebound and a medium - term weak oscillation [6]. Summary by Directory Chapter 1: Core Contradiction and Strategy Suggestions 1.1 Core Contradiction - The short - term core contradiction focuses on the continuation of geopolitical risks and the digestion of overbought conditions. The key variables are the spread of the Yemen situation to the Bab el - Mandeb Strait and the frequency of Ukraine's attacks on Russian energy facilities. The medium - to - long - term core contradiction returns to fundamentals. On the demand side, the risk of economic recession in Europe and the US suppresses oil consumption, and although Asian demand provides some support, it cannot offset global weakness. On the supply side, there is no supply gap as OPEC+ may adjust supply and US shale oil production is stable [2][4]. 1.2 Speculative Strategy Suggestions - The market is in a short - term rebound and medium - term weak oscillation. Suggested strategies include: in the month - spread strategy, go long on Brent2512 - 2602 and WTI2512 - 2602; in the domestic - foreign arbitrage strategy, go short on SC - Brent; in the crack spread, continue to hold short positions in RBOB gasoline - WTI and long positions in ICE diesel - Brent [6]. Chapter 2: This Week's Important Information and Next Week's Concerns 2.1 This Week's Important Information - **Likely to be bullish**: Geopolitical risks have increased, injecting a premium; EIA inventory has a low increase, strengthening supply - demand support; sanctions and conflicts have intensified supply concerns [7]. - **Likely to be bearish**: The Middle - East physical market has weakened; global demand expectations have been continuously revised down; there is still room for supply - side flexibility [10]. 2.2 Next Week's Concerns - Track the dynamics of the Middle - East geopolitical situation, especially the escalation of US - Houthi armed conflicts, the impact of Israeli military air - strikes on Sanaa, and the safety of the Bab el - Mandeb Strait. Also, be vigilant about the progress of the US - Iran talks. - Monitor the progress of the Russia - Ukraine conflict in the energy dimension, including the frequency of Ukraine's attacks on Russian energy facilities and the implementation of Russia's refined - oil export ban [11]. Chapter 3: Disk Analysis 3.1 Volume, Price, and Fund Analysis - **Trend analysis**: This week, crude oil showed a geopolitically - driven oscillating upward trend, with Brent crude breaking through the September high. The trend is centered around the game between geopolitics and fundamentals [12]. - **Domestic market**: The short - term trend is oscillating upward. Technical indicators show short - term bullish momentum, but there is a risk of technical correction. The WTI and Brent crude in the international market also show upward trends, but attention should be paid to support and resistance levels [14][15]. - **Fund and position analysis**: Information on domestic and international crude oil futures positions and changes is provided [15][16]. Chapter 4: Valuation and Profit Analysis 4.1 Crude Oil Market Month - spread Tracking - Brent and WTI crude oil month - spreads maintain a slight Backwardation structure, indicating short - term supply tightness or stable demand. Dubai and domestic SC crude oil month - spreads are weak, reflecting the relatively weak domestic market [26]. 4.2 Crude Oil Regional Spread Tracking - The spread between SC and Brent crude oil has rapidly narrowed, reflecting the decline of international oil prices and the relatively loose domestic supply - demand situation [31]. 4.3 Crude Oil Downstream Valuation Tracking - The crude oil crack spread shows a clear differentiation of "strong diesel, weak gasoline". Diesel spreads may remain high in the short term, while gasoline spreads are difficult to improve. This differentiation is due to energy transformation and geopolitical games [36]. Chapter 5: Supply - Demand and Inventory Deduction 5.1 Supply - side Tracking - Information on US and Chinese refinery crude input, operating rates, and US crude oil production and rig numbers is provided [57][60]. 5.2 Demand - side Tracking - Data on US and Chinese refinery operating rates are presented [57]. 5.3 Inventory - side Tracking - As of September 19, data on US commercial crude oil, strategic petroleum, and Cushing region inventories are given [62]. 5.4 Balance Sheet Tracking - EIA9 monthly report shows that global oil demand is expected to increase slightly in 2025, supply is rising, refinery throughput has fluctuations, and inventory has different trends. The market is affected by geopolitical concerns and the prospect of supply surplus [64][65][66].

Report Summary 1. Industry Investment Rating No information provided. 2. Core View The report presents the latest prices of international crude oil futures, analyzes the status of global benchmark crude oil, refined oil, and regional crude oil arbitrage, and reports key market news and trends in the crude oil market [1][2][3][6][7][10]. 3. Summary by Related Catalogs Global Benchmark Crude - Arab Extra, Arab Light, Nemba, and Agbami against WTI MEH all had closed arbitrage with negative spreads, indicating poor economic efficiency and competitiveness [2]. Refined Oil Arbitrage - **Gasoline Route**: The European - New York route was open with a profit of $1.06/bbl, while others like Mediterranean - New York and European - Mexico were closed [3]. - **Diesel Route**: Routes from USGC ULSD to NWE and Mediterranean were open, with profits of $1.1/bbl and $0.08/bbl respectively; some routes from the Arab Gulf had negative or narrow - profit situations [5]. - **Aviation Fuel Route**: Routes like Arab Gulf - Mediterranean were open with a profit of $1.05/bbl, while others such as Korea - USWC were closed [5]. US Gulf Crude Oil Arbitrage - Asian gasoline cracking spreads fluctuated, diesel cracking spreads were strong, jet fuel cracking spreads improved, and naphtha cracking spreads were negative but narrowing [6]. Northeast Asian Crude Oil Arbitrage - Freight rates for various routes such as AG - USGC, WAF - USGC, USGC - NWE, and AG - Singapore increased, reflecting increased demand and active transportation [7]. Key Market News - France's President Macron will meet with Iran's President to discuss restoring UN sanctions; Spain approved a "full - scale arms embargo" on Israel; Iran's Supreme Leader said no intention to produce nuclear weapons; there are concerns about restoring sanctions on Iran; US API crude and Cushing inventories changed; Russia may extend gasoline and discuss diesel export bans [10]. Crude Oil Trend Intensity The crude oil trend intensity was 1, indicating a neutral - to - slightly positive view [9].