Three things that got the team talking this week - Firetrail Investments

Weekly insights from the Trail

Three things that got the team talking this week

September 16, 2022September 23rd, 2022

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1. Animal crackers…

We’ve found two interesting charts on renewable diesel feedstocks. Animal fat demand is up (tallow = animal fat), but there is no more supply coming on. So this will continue to put upward pressure on the price. Used cooking oil is under the same demand/supply conditions. Supply is constrained as they are both by-products of a primary use. It’s good news for S3 Global Opportunities Holding, Darling Ingredients, who are North America’s largest source of renewable feedstocks and a producer of sustainable fuels.

While we’re on renewable fuels – If you turned every drop of soybean oil produced into sustainable aviation fuel it would only meet 7.5% of total jet fuel demand. If you used every drop of every vegetable oil (soy, palm, canola) it would still only meet 35% of total demand. Let alone having no food to eat…

Source: BAML

2. 20 parts make a whole…

Did you know that a petrol engine has 2000 moving parts. Whilst in an electric vehicle powertrain, there are only 20 moving parts.

Source: Volkswagen

3. The new dynasty…

Are we at ‘peak China’? Some demographers now see 2022 as the year that China’s population starts to shrink, partly as a result of growing uncertainty among the young about how to earn a living. Forecasts for China’s 2022 GDP growth now sit at 3.5%, which would be the second lowest in over 40 years. But there are signs China may be emerging from its Covid sedation. Beijing Daily is reporting that according to the National Energy Administration, domestic electricity consumption in August was up 10.7% YoY. That sees total domestic electricity consumption in the first 8 months of the year rising 4.4% YoY.

Source: National Bureau of Statistics of China

Source: Chinese Ministry of Civil Affairs

Disclaimer

This article is prepared by Firetrail Investments Pty Limited (‘Firetrail’) (ABN 98 622 377 913, AFSL 516821) as the investment manager of the Firetrail Australian High Conviction Fund (ARSN 624 136 045), the Firetrail Absolute Return Fund (ARSN 624 135 879), the Firetrail Australian Small Companies Fund (ARSN 638 792 113) and the Firetrail S3 Global Opportunities Fund (ARSN 653 717 625) (‘the Funds’). Pinnacle Fund Services Limited ('PFSL') (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the relevant Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.

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