BAKU, Azerbaijan, Sept.20
By Leman Zeynalova – Trend:
Asian jet fuel demand is expected to strengthen from the pandemic nadir over the coming quarters as vaccine rates improve (albeit the pace of administration is proving to be highly uneven across markets) and more of the Asian economies open select tourist hotspots to fully vaccinated travelers, Trend reports with reference to Fitch Solutions.
“However, this will be highly contingent on the region’s ability to manage the coronavirus without any further major relapses down the road. The gradual recovery in regional cross-border travel can only be good for depressed jet fuel margins, which suffered a huge dip during the early parts of the pandemic but have been posting steady improvements in recent months next to progress being made in national inoculation campaigns and broader virus management. Indeed, the profit for turning crude (Dubai Fateh) into jet fuel rose to USD5.1/bbl in September, the highest level since March 2020, but a fraction of the 2019 pre-pandemic average of USD12.2/bbl, indicating that the current nascent recovery has much further to go,” said the company.
As for China in particular, Fitch Solutions notes that even accounting for the recent stumble in July, YTD jet kerosene consumption in China has fared quite strongly, up almost 20 percent against 2020’s averages and more than 1 percent up against the whole year average in 2019.
“The approaching ‘Golden Week’ holiday in China may see a near-term boost in fuel consumption overall, albeit mobility restrictions and social distancing regulations remain in place in some provinces, and could dampen any sharp surges in passenger movement and fuel demand, particularly with the government still wary of provincial-level outbreaks and seemingly preferring a ‘zero Covid-19’ approach. In regards to jet fuel, any boost to demand through the holiday period would depend on the level of restrictions in place. Historically, the fuel does not typically see much of a boost in demand from the ‘Golden Week’. In the past five years, jet fuel demand has averaged m-o-m gains of a mere 2 percent over August-September, while demand typically performs worse through the September-October period, declining on a monthly basis as the holiday period comes to an end. However, barring a significant deterioration in the domestic Covid-19 situation and public health rules permitting, the risks are to the upside due to there being much pent-up demand for travel in general among domestic consumers,” the company said.
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