Singapore and Japan to start 'reciprocal' business travel Sept 18 in boost for jet fuel demand

Singapore — Singapore and Japan have agreed a business track or "reciprocal green lane" to facilitate essential business and official travel between the two countries, their foreign ministries said Sept. 11, a move likely to support a recovery in regional jet fuel demand that has been battered the coronavirus pandemic.

The business track will allow the safe resumption of cross-border travel and business exchanges from Sept. 18, with public health safeguards in place including pre-departure and post-arrival testing as well as adherence to a controlled itinerary for the first 14 days in the receiving country, according to the joint statement.

"This is good news, I would be grateful if this will be a breakthrough for gradual [jet fuel] demand recovery," a Japanese refinery source said. "We can expect to see a recovery in the demand should there be ensuing developments like this," he added.

Singapore currently has similar travel arrangements with China, South Korea, Malaysia and Brunei, and is in discussions with other jurisdictions including Hong Kong and Thailand, according to media reports. This is the first such agreement for Japan.

Japan Airlines had already said Aug. 20 that it would be raising the number of weekly round-trip flights to Singapore in September from two to three.

The resumption of business travel between nations should support jet fuel prices, industry sources said.

"I think that the green lanes between countries is a good start. From a handful flights [in some countries] to more approved business and official flights is a step in the right direction. But to really see a meaningful impact, long-haul leisure flights must be ramped up," a Singapore-based trading source said Sept. 11.

Front-month Singapore jet fuel/kerosene timespreads were pegged at minus 90 cents/b at 0300 GMT Sept. 11, having rebounded from a three-month low of minus 97 cents/b to minus 94 cents/b on Sept. 10.

Mirroring the uptick in sentiment, the Q4 2020-Q1 2021 quarterly jet fuel/kerosene spread -- an indication of near-term sentiment -- narrowed to minus $2.67/b at the Asian close Sept. 10, 11 cents/b narrower from minus $2.78/b on the day.

Japanese refiners shipped an estimated 2.12 million barrels of jet fuel in the four weeks to Sept. 5, down 12.7% from the previous four weeks, according to S&P Global Platts calculations based on the Petroleum Association of Japan data.

The drop in the jet fuel shipments in August was attributed to a resurgence of the coronavirus pandemic in Japan, which slashed demand for domestic travel.

However, Japan's weekly jet fuel exports, a substantial portion of which are bonded shipments for international flights, increased to 1.49 million barrels in four weeks to Sept. 5, up 10.3% from the previous four weeks, according to PAJ data.