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Business Times
07-07-2025
- Business
- Business Times
After petrol, China's oil refiners face a jet fuel glut
[NEW YORK] China's oil refiners are grappling with an oversupply of jet fuel, in yet another blow to the bottom line of a sector already dealing with ebbing demand for petrol and diesel. In the post-pandemic period, as flights returned to the skies, jet fuel was a boon for domestic refiners struggling with a sputtering economic recovery, the electrification of the car fleet and trucks turning to alternatives such as liquefied natural gas. Refiners piled into aviation, using up feedstock that in the past would have gone into road-transport fuels. Now, though, there may be too much of a good thing. Supply this year is already running over 40 per cent ahead of demand, according to data from analytics firm Kpler. In the long term, structural changes, like the build out of high-speed rail, stand to limit future growth. 'Jet was China's solution to demand destruction in gasoil and petrol, but all it did was shift the problem elsewhere,' said Zameer Yusof, a middle distillates analyst at Kpler, who forecasts a surplus of 390,000 barrels per day in the country this year. 'Chinese international travel looks weak, contributing to the glut we are seeing.' Granted, consumption is set to keep climbing in 2025 as more aircraft take flight and a larger proportion of the population travels – but it's still short of the growth that the refining system needs to absorb the extra production. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up A pivot towards domestic travel in recent years, at the expense of international routes, has not helped, slowing the growth trajectory further. Other headwinds include an uncertain outlook for consumer spending, plus newer, more fuel-efficient aircraft and better management by airlines eager to trim the consumption necessary for each flight. With 'limited options for relief', Chinese refinery margins will remain under pressure, Yusof said. Export trouble As with much of China's excess capacity, much of this may turn into a headache beyond its borders. Last month, Kpler forecast the nation's June exports would reach a record 2.6 million tonnes, potentially displacing flows into the region from the Middle East and India. China's refineries have been struggling with paper-thin margins for years. China's diesel demand likely peaked in 2019, while the nation's electric-vehicle boom means petrol consumption may have crested in 2023, the chairman of top refiner Sinopec Group said in March. Beijing has urged a shift towards making more petrochemical products – including ethylene, a key building block for many plastics – but that has done little to ease the financial pain. 'There is already too much ethylene-producing capacity in China,' said Manish Sejwal, a natural gas liquids analyst at Rystad Energy. 'This is all happening at a time when demand for ethylene remains clouded by a slowing global economy.' The country plans to add six million tonnes of ethylene production capacity in 2025, and a further 20 million tonnes over the next three years, according to Rystad, taking total capacity to 70 million tonnes. Bloomberg
Time of India
02-07-2025
- Business
- Time of India
Northeast Asia sends the most jet fuel to Europe in nearly a year in June, ET Infra
Advt Advt Traders shipped the most jet fuel from Northeast Asia to Europe in almost a year in June, driven by lower freight rates, ample regional supply, and concerns over potential supply disruptions from the Middle East, according to ship tracking data and trade 350,000 metric tons (2.8 million barrels) of aviation fuel were shipped from South Korea and China to Europe in June, Kpler data showed. Trader estimates suggest total bookings for the month could reach up to 465,000 shipments are expected to slightly ease Asia's jet fuel oversupply and help stabilise prices in the near term, according to tankers were chartered in June by major players including Vitol, BP, Aramco Trading, Gunvor, and Unipec — the trading arm of Asia's largest refiner, Sinopec, Kpler data showed. Vitol and Saudi Aramco declined to comment, while Gunvor, Unipec, and BP did not immediately respond to fuel exports from Northeast Asia rose in June as refiners ramped up production following maintenance and as profit margins — or "product cracks" — improved, said Ivan Mathews, head of APAC analysis at weak spot demand from regional importers, traders diverted spot cargoes westward to capitalise on stronger margins and lower shipping costs, two Singapore-based trade sources said.'These flows were purely opportunistic, spurred by geopolitical tensions that sent Northwest Europe cracks surging, while freight rates on modern newbuild vessels remained attractive enough to justify the move,' said Zameer Yusof , senior lead research analyst at jet fuel prices in Northwest Europe remained $60 to $80 per ton higher than in Asia through most of June, LSEG data showed. Demand in Europe typically spikes during the summer travel season — Eurocontrol data showed June flight numbers were up 5.2 per cent year-on-year and 7.8 per cent over Middle East conflict also contributed to rising European jet fuel prices. Meanwhile, the cost to ship 90,000 tons of jet fuel on LR2 tankers fell to a one-month low of $40 to $45 per ton for bookings made before the Iran-Israel conflict began on June least four new LR2 tankers have been booked to carry jet fuel from East to West for June and July, according to two shipping sources. Shipbroking sources noted that maiden voyages on new vessels often come at lower freight rates, as owners seek to build tracking history and analysts don't expect the recent exports to lift Asian jet fuel prices significantly.'Asia remains chronically net long jet/kero by around 625 kbd in June and July, and Europe-bound flows won't make a meaningful dent in that surplus,' said Kpler's alone is targeting jet/kero exports exceeding 2 million tons per month, he added. In May, China exported 1.92 million tons of jet fuel — a 20 per cent increase year-on-year.
