Wednesday, August 05, 2020

Asian jet fuel margins slip with Covid-19 second wave

Asia-Pacific jet fuel refining margins against Dubai crude values have fallen to a two-month low as a second wave of Covid-19 cases stalls travel and any recovery in jet fuel demand.

Margins fell to $0.59/bl yesterday from $1.61/bl on 30 July, after having hovering around $1.13/bl to $2.35/bl since the start of July. They were last valued lower at $0.20/bl on 5 June.

A resurgence of Covid-19 cases in various countries have resulted in fresh flight suspensions, lockdowns and delayed plans to resume travel. Philippine airlines Cebu Pacific and Philippine Airlines have suspended domestic flights to and from Manila until 18 August as the country's capital and surrounding provinces entered fresh lockdowns amid soaring cases. New Zealand said plans for a travel bubble between itself and Australia will unlikely start anytime soon, with Melbourne in lockdown from 2 August until mid-September with a fresh outbreak.

But margins were held up by jet fuel production and exports expected to remain low, with market participants estimating China's exports to be at 76,000-127,000 b/d in July and forecast at 51,000-76,000 b/d for August. The country had exported 203,000 b/d of jet fuel in June, according to customs data. But traders said this include volumes other than seaborne exports, such as those pumped into aircraft for international flights, although this could not be confirmed.

Rare jet fuel cargoes have also come to Singapore from the Mideast Gulf amid firmer Asian jet fuel prices, adding to supplies in the region and potentially pressuring markets further. A few vessels carrying August-loading jet fuel cargoes continue to have Singapore as a discharge option. Trading firm Vitol possibly chartered the Hafnia Shanghai to ship 60,000t (473,000 bl) from the Mideast Gulf, either to northwest Europe for $1.15mn or to Singapore for WS67.5 on 9 August.
04/08/20 Argus
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