Multi-provincial Ethanol Gasoline Launched to Promote Traditional Gasoline to Succeed in the Next Year

The full promotion of ethanol gasoline kicked off.

Since September, the fifteen ministries and commissions of the Development and Reform Commission issued the "Implementation Plan for Expanding the Biofuel Ethanol Production and Promoting the Use of Vehicle-Used Gasoline," Tianjin and Shandong Provinces have recently released the implementation plan for the promotion of vehicle ethanol gasoline. Traditional gasoline will cease to be sold.

Among them, from October 1, 2018, the city of Tianjin began to close sales of ethanol gas for vehicles; before March 30, 2018, Shandong promoted the use of eight cities for ethanol. Earlier, Henan Province had already closed the promotion of ethanol gasoline in the province, and Hebei Province also began to use ethanol gasoline.

Analysts said that in addition to Tianjin and Shandong, the Beijing-Tianjin-Hebei region and the surrounding key areas for the prevention and control of atmospheric pollution are expected to be the first to promote ethanol-based gasoline and start the era of ethanol gasoline.

Traditional gasoline will be suspended from next year

According to the requirements of the program, key areas of Beijing, Tianjin, Hebei, and surrounding areas to control air pollution began to be popularized in 2018, and full coverage will be achieved in 2019. By 2020, full coverage of vehicle ethanol gasoline will be achieved nationwide.

After the above plans were released, the industry was waiting for the implementation of the documents to be issued. "Securities Daily" reporter learned that, in recent days, Shandong and Tianjin were the first to announce implementation plans to promote the use of ethanol gasoline.

The “Implementation Plan for Promoting the Use of Vehicle Ethanol Gasoline in Tianjin” issued by Tianjin Municipality requires that, starting from October 1, 2018, the city begins to close sales of ethanol gas for vehicles. In 2016, the city's total gasoline sales volume was 2.5364 million tons. According to the ethanol addition of 10%, the city will need about 250,000 tons of ethanol each year.

Program, said Tianjin ethanol gasoline implement steps divided into four phases: the preparation phase (December 2017 - March 2018); facilities construction, renovation phase (January 2018 - August 2018), complete with a car during the ethanol gasoline distribution centers and gas stations construction and renovation work vehicle cleaning, relevant departments acceptance in accordance with the relevant provisions; transitional period (September 2018); close the operational phase (since October 2018).

Meanwhile, the announcement of Shandong Province, "Shandong Province ethanol gasoline promotion plan" requirements, Jinan, Zaozhuang, Tai'an, Jining, Linyi, Texas, Liaocheng, Heze eight cities in summing up experience, improve the basic embodiment of a further increase great efforts in 2017 to promote the use of ethanol gasoline vehicle. Prior to March 30, 2018, it promoted the use of ethanol in vehicles in eight cities, conducted market inspections, conducted centralized rectification actions, eliminated blind spots in supervision, and consolidated the closed achievements, laying a good foundation for the promotion of the use of ethanol for gasoline in the province.

Among them, Qingdao, Zibo, Dongying, Yantai, Weifang, Weihai, Rizhao, Laiwu, Binzhou City, 9 (hereinafter referred to as the city of Qingdao 9) from 1 January 2020 to start adding ethanol gasoline to promote the use of regional, provincial administration Closed sales within the region and the use of ethanol gasoline for vehicles All petrol stations (excluding military special needs, national and special reserve oils) will cease to sell regular gasoline, and all gasoline varieties sold will be sold as ethanol gasoline for vehicles. In 2020, the province’s gasoline consumption is estimated to be 10.65 million tons, and the consumption of 9 cities such as Qingdao is about 6.5 million tons.

This means that from next year, traditional gasoline will be suspended in many places such as Tianjin and Shandong.

Ding Xu, an analyst with Longzhong Petrochemical Network, told the "Securities Daily" reporter that Shandong and Tianjin have recently proposed a plan for the promotion of vehicle ethanol gasoline, which may be directly related to Beijing-Tianjin-Hebei and surrounding air pollution control. One of the advantages of ethanol gasoline is that it is cleaner and cleaner than traditional gasoline. In addition, taking into consideration that there are several fuel ethanol production enterprises in Henan, Tianguan, Anhui Fengyuan, Shandong Longli, and Tianjin Tianguan under construction, the supply of raw materials is relatively guaranteed.

“In the key areas of Beijing, Tianjin, Hebei, and surrounding areas where air pollution prevention and control is concerned, Henan province has already closed the promotion of ethanol gasoline. The six cities in Shijiazhuang, Handan, Xingtai, Baoding, Zhangzhou and Hengshui in Hebei Province also use ethanol.” Xu Pengchuang analyst Xu Peng also told the "Securities Daily" reporter, the current point of view, Beijing and Shanxi Province have not released the promotion of ethanol gasoline policy. Under the requirements of national policies, the relevant policies in the key areas of Beijing, Tianjin, Hebei, and surrounding areas for the prevention and control of atmospheric pollution will also be actively promoted, and the era of ethanol gasoline is really coming.

Gasoline Gasoline Surplus Supply Gap

It is worth noting that if the above-mentioned ethanol gasoline promotion plan is implemented as scheduled, there will be pressure on manufacturers, distribution companies, and retail terminals.

Both Shandong and Tianjin have predicted in the “Programme” that by 2020, the consumption of gasoline in the two places will be about 13 million tons/year, and 1.3 million tons of fuel ethanol will be needed, which has accounted for 50% of the current production of fuel ethanol in China.

Ding Xu said that in order to promote ethanol gasoline in China by 2020, there is still a shortfall of more than 8 million tons per year. It is indispensable to expand the production capacity of fuel ethanol. At the same time, the import policy may also change, such as lowering the import tariff of fuel ethanol, trade. Businesses may also be able to seize opportunities from them.

A research report from Orient Securities also stated that China has a huge market for fuel ethanol. The “13th Five-Year Plan” of the Energy Administration proposes that China’s fuel ethanol production by 40% tons by 2020, which is a 54% increase from the current level; and the long-term calculation based on the addition of 10% gasoline, compared to the current shortfall of nearly 9.4 million tons of ethanol.

At the same time, for production companies, the vast majority of Shandong geometallurgical companies have not yet obtained the reconciliation qualification of ethanol gasoline, that is, they are unable to produce and sell ethanol gasoline. At least until April 2018, they cannot complete the corresponding layout arrangements. If the monitoring efforts are large, Shandong Terra may temporarily lose market share in these cities.

“But the qualification for reconciliation of ethanol gasoline blending companies will also be accelerated with the promotion requirements. From September to now, at least two local refining companies have recently obtained this qualification. Related facilities for ethanol gasoline, such as reconciliation devices and distribution dispatch facilities The gas tanks, gas station tanks, etc. also need to be modified accordingly to meet the special requirements of short storage period and perishable quality of ethanol gasoline storage. Although this operation is relatively simple, it takes a long time to fully implement the required time. Ding Xu also pointed out that the major changes in the field of automotive fuel will come shortly. Pilots have implemented ethanol gasoline for more than 10 years. Whether this can truly make a breakthrough can still be observed.