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China's domestic jet fuel demand rebounds to pre-COVID levels

Domestic aviation fuel sales amounted to about 2 million tonnes (523,300 barrels per day) last month, the highest since February and slightly below January

twitter-logoReuters | October 28, 2020 | Updated 14:13 IST
China's domestic jet fuel demand rebounds to pre-COVID levels
China's apparent jet fuel demand posted its first year-on-year growth this year at 2% in September at 920,000 bpd, Liu said, who estimated by adding domestic output to net imports but excluding inventory changes that China does not report

China's domestic aviation fuel consumption rebounded to near pre-COVID levels in September, thanks to a fast recovery in passenger travel and cargo freight, although demand from international flights remained weak, industry sources said. Domestic aviation fuel sales amounted to about 2 million tonnes (523,300 barrels per day) last month, the highest since February and slightly below January, said two sources with knowledge of the matter.

Domestic flights account for roughly two-thirds of China's overall consumption of the aviation fuel. The rebound in jet fuel demand has improved Chinese refiners' margins and enabled them to process more crude. From late October through March, domestic consumption will receive a further lift as China adds more flights to the seasonal winter/spring air traffic planning.

Between Oct. 25 and March 27, Chinese airlines will fly 84,634 domestic flights a week, 19.8% more than the year-ago level, while weekly cargo flights will rise nearly 40% to 2,101, the Civil Aviation Administration of China said last week. "Domestic passenger travel recovered to just 2% under the year-ago level and freight volume is also improving month on month," said Liu Yuntao, an analyst with consultancy Energy Aspect.

China's apparent jet fuel demand posted its first year-on-year growth this year at 2% in September at 920,000 bpd, Liu said, who estimated by adding domestic output to net imports but excluding inventory changes that China does not report. However, with international flights at less than 5% of 2019 volume due to tight border controls, a full recovery to the 2019 level would take years, said a Beijing-based official with China National Aviation Fuel Corp (CNAF).

The lackluster demand from international flights was reflected in China's jet kerosene exports data, which covers jet fuel cargo exports and refueling of airlines plying international routes. September exports sank to a multi-year low and exports between January and September fell 31% on year.

"China's overall jet fuel consumption could at best resume 75% to 80% of 2019's level this year, and may take five years to fully recover," said the CNAF official who declined to be named as he's not a spokesperson. China consumed a record of about 38.7 million tonnes of jet fuel last year.

Also read: SpiceJet begins facilitating COVID-19 tests for passengers in India, UAE flights

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