Lunar New Year may be more than two months away but one Chinese fuel supplier is already gearing up for an expected surge in air travel.
China Aviation Oil is seeking to import jet fuel for January delivery in its first buy tender since May, according to data compiled by Bloomberg. The move by CAO, one of the largest buyers of jet fuel in Asia, comes as Chinese domestic air travel continues to recover after the pandemic-driven destruction.
Tourism has rebounded in China after early and aggressive measures by the country to tackle the coronavirus proved effective in curbing its spread. The nation’s success in warding off a major outbreak during the Golden Week holiday in early October could also help boost optimism for locals preparing to travel back home during the Lunar New Year break.
Traders expect a rise in Chinese jet fuel imports ahead of the extended holiday in February, even as overall volumes are forecast to remain well below 2019 levels.
CAO’s activity is a positive sign that China’s jet fuel consumption is improving, said Fenglei Shi, an analyst at IHS Markit. However, buying is partly driven by the incentive to stock up ahead of the Spring Festival when travel usually peaks, and there are still some uncertainties after the holiday ends, she said.
While China’s typically a net exporter of jet fuel, the country also imports the fuel in an opportunistic manner.
China’s domestic aviation has been a rare recovery story in the midst of a suffering global jet fuel market, with local flights last month at about 88% of the levels seen a year earlier. IHS Markit expects jet fuel demand to reach 95% of 2019’s level by this month.