Open source securities recently issued a basic chemical industry comment report: According to Baichuan Yingfu data, as of November 19, the EU and China SAF FOB prices were $2,500 and $2,960 per ton, respectively, up by +39% and +60% from the beginning of 2025; the tax-free price of waste cooking oil was RMB7,050 per ton, up by +9% from the beginning of 2025; according to our calculation, China SAF's profit per ton exceeded RMB4,000 per ton.

The following is a research

The end-of-year EU SAF blending obligation is approaching, and the EU's increased decarbonization target is set to boost biodiesel demand.

According to data from Baichuan Yingfu, as of November 19th, the EU and China's SAF FOB prices were $2,500 and $2,960 per ton, respectively, representing increases of +39% and +60% compared to the beginning of 2025; the tax-free price of waste cooking oil was ¥7,050 per ton, up +9% from the beginning of 2025; according to our calculations, China's SAF has a profit of over ¥4,000 per ton. As the year progresses, the EU and the UK will calculate the addition ratio of 2% SAF, while the overseas leader NESTE will reduce production in its two SAF production factories at the end of the year, and the supply and demand of SAF will continue to be tight, leading to a continuous increase in product prices. In addition, the EU will gradually implement the "Renewable Energy Act III" (RED III) starting in 2026, which aims to improve carbon reduction targets while canceling the policy of double carbon reduction for the production of biodiesel from waste edible oil (UECO). It is expected that from 2026, the demand for biodiesel and raw UCO will continue to grow. In summary, the prosperity of the biodiesel industry chain is still on the up escalator, and the UCO-HVO/SAF industry chain is expected to continue to rise.

SAF: End-year stockbuild and overseas plant maintenance are being pursued in parallel to support tight supply and demand dynamics, and there is ample room for future demand.

NESTE plans to carry out a 6-week maintenance at its Rotterdam plant in the 4th quarter of 2025 and at its Singapore plant in December. Although three new companies have been added to the list of China's SAF export white名单 recently, it still takes some time from the ability to export to the realization of sales. As of October, the proportion of SAF added in the UK is 1.6%, which still has a gap from the 2% addition target. Therefore, we believe that with the verification of the 2% SAF addition ratio by the EU and the UK at the end of the year, the supply and demand of SAF will continue to be tight. The Civil Aviation Authority of Singapore announced that starting from April 2026, a " Sustainable Aviation Fuel (SAF) surcharge" will be levied on all passengers and cargo on flights departing from Singapore, and set targets of 1% SAF addition in 2026 and 3%-5% SAF addition in 2030. In 2026, the EU will gradually implement the RED III directive, and most EU producers may choose to prioritize the production of HVO rather than SAF. China's SAF has a significant cost advantage and is competitive. Entering 2027, CORSIA requires member countries to mandatorily implement the SAF blending ratio, and achieve net-zero emissions in the aviation industry by 2050. At present, the global aviation kerosene demand is 300 million tons, assuming that the global average adds 1% of SAF in 2027, and considering that the EU and the UK add 2% of SAF, the global demand for SAF in 2027 will reach 3-4 million tons. IATA expects that the global demand for SAF will reach 400 million tons in 2050.

Biodiesel: EU Renewable Energy directive III implementation and increase in marine fuel bunkering, demand is expected to continue to increase

The EU will gradually implement the RED III regulation in 2026, which raises the decarbonization target for 2030 compared to RED II, increasing the target for the share of renewable energy consumption from 32% to at least 42.5%, and it should be 45%; the target for the share of renewable energy in the transportation sector is increased from 14% to 29%; the policy of double decarbonization for the production of biodiesel from UCO as raw material is cancelled. In other words, the EU began to raise its carbon emission target in 2026, increasing the demand for biodiesel, especially for second-generation biodiesel. At the same time, the policy of double decarbonization for UCO is cancelled, and the demand for biodiesel and UCO will nearly double. According to the data from the USDA and our calculation, the demand for biodiesel produced from UCO as raw material in the EU is expected to be 3.74 million tons in 2025, and the demand may increase by another 4 million tons in 2026. In addition, with the "IMO Net Zero Framework" of the International Maritime Organization, the addition of shipping biodiesel is expected to increase in the future. In 2024, Singapore's ship fuel topping-up was 5.358 million tons, and it requires that all new port ships be electric or 100% biofuels by 2030, and if 50% biodiesel is added in the future, the demand will be in the ten million tons level.

Risk warnings: policy advancement may not meet expectations, raw material prices may rise significantly, and technological progress may not meet expectations, etc. 

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