Tuesday, July 07, 2020

Analysis: India delaying flight restart to weigh on jet fuel demand

Singapore: India has deferred the resumption of international commercial flights until July 31 from its previous announcement of July 15 while also curtailing some domestic flights, marring the prospects of an aviation recovery in the world's second most populous country, and a major jet fuel consumer and exporter.
Register Now The delay comes at a time when the coronavirus pandemic has severely restricted movement of people globally, including for air travel, and slowed down economies, bringing some to a grinding halt.
Extending the ban would give India more preparation time before allowing international flight operations, according to local media quoting senior Indian government officials.
On the domestic front, flights into Kolkata in eastern India have also been curtailed by the aviation ministry. The Kolkata airport authority said in a tweet on July 4: It is informed that no flights shall operate to Kolkata from Delhi,Mumbai, Pune, Nagpur, Chennai & Ahmedabad from 6th to 19th July 2020 or till further order whichever is earlier.
India has now surpassed Russia as the third highest country in the number of COVID-19 cases. As of 0330 GMT July 7, infected cases in India stood at 697,413, and the death toll at 19,693.
The drop in passenger traffic left little choice for Indian refineries but to maximize gasoil output over jet fuel, industry sources said July 6.

Chennai Petroleum Corp. Ltd., for one, slashed its run rate to 30%-35% during the lockdown period by shutting two of the three crude distillation units. Its refining margin also fell into negative during the two-and-half month lockdown period, S&P Global Platts reported. Its Manali refinery, like other state-run refiners, had invoked force majeure to its suppliers in the Middle East for crude cargoes scheduled for May delivery. In March, the refinery's run rate stood at 96%, but fell to 36% in May.

"Demand [for jet fuel] is still weak, there is no incentive for refiners to run at high rates and end up holding unwanted jet [barrels]," a Singapore-based refining source said.
Asian gasoil demand has picked up at a much faster rate compared with its codistillate.
07/07/20 S&P Global
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