Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list

Jet fuel demand concerns mount as key airlines suspend China flights

Commodities | Coal | LNG | Natural Gas | Natural Gas (North American) | Oil | Crude Oil | Steel | Shipping | Coronavirus

Market Movers Americas, Aug 3-7: Brent-WTI spread at widest since May

Jet Fuel

Platts Jet Fuel

Capital Markets | Commodities | Oil | Crude Oil | Refined Products | Fuel Oil | Gasoline | Jet Fuel | Naphtha | Marine Fuels | Equities | Financial Services | Banking | Non-banks | Private Markets

North American Crude Oil Summit, 3rd annual

Natural Gas | Oil | Crude Oil | Petrochemicals

Saudi Aramco conserves capex as profits crash

Jet fuel demand concerns mount as key airlines suspend China flights


More airlines expected to suspend flights to/from China

One single flight to China carries around 80-90 mt jet fuel

Jet/kerosene demand averaged over 8 mil b/d Q1-Q3 last year

London — Key international airlines including British Airways and Lufthansa said Wednesday they have suspended all direct flights to and from mainland China due to the coronavirus outbreak, further denting spot jet fuel demand.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The news follows on from a series of carriers cancelling or reducing flights to China including American Airlines, United Airlines, Swiss International Air Lines and Austrian Airlines.

The virus, which has claimed more than 100 lives, is causing analysts to cut their oil demand growth forecasts for 2020 significantly.

Oil prices have fallen sharply in the past 10 days, with ICE Brent futures dropping more than 8% to around $59/b, although in late afternoon trading in London Wednesday, they had recovered to around $60/b.

A direct flight from London Heathrow airport to Beijing Capital International airport -- a key Europe-China route -- normally lasts around 11 hours and estimates gathered by S&P Global Platts indicate it carries 80-90 mt of aviation fuel.

Demand hub

In the first three quarters of 2019 global jet fuel demand averaged 8.01 million b/d, against total oil demand of 100.83 million b/d, according to Platts calculations based on International Energy Agency data.

Demand growth for aviation fuel has recently been heavily concentrated in China, Southeast Asia and South Asia.

The IEA estimates Chinese jet/kerosene 2019 demand at 858,000 b/d, up 5.7% on the year.

Concerns on prompt jet fuel demand are beginning to affect the oil products complex.

Jet crack spreads -- measuring the differential between an oil product and the crude from which it is derived -- have narrowed against Brent crude amid expectations of lower demand.

The Singapore jet/kero crack spread ended Tuesday at $8.88/b, down from $11.34/b as of January 20, Platts data shows. The Rotterdam jet/kero crack ended Tuesday at $12.90/b, down from $14.17/b January 20. The US Atlantic Coast jet crack ended Tuesday at $12.68/b, down from $14.18/b January 17.

Bearish market

The European jet market remains weighed down by low demand and, with some Europe-China flights already impacted, the outlook is mostly bearish.

One jet fuel trader said that, if the pace of flight cuts accelerates, it "is quite a big game changer."

"It will be a race to the bottom. The macro environment suggests it's going to fall quite a lot. January is a weak month anyway," he added.

"Aviation is always risk averse. When buying fuel you don't start with price, you start with risk," said another trader.

Platts Analytics is forecasting a catastrophic drop of oil demand of 2.6 million b/d in February and 2 million b/d in March, according to its worst-case scenario.

"In best-case, it drops by 900,000 b/d in February and 650,000 b/d in March," it added.

"Crucially, both scenarios are assumed to be short-lived, as this is a common trait with the overwhelming majority of the epidemic outbreaks. Therefore, we assume the impact will fizzle out by June-July," Platts Analytics said.

The Chinese government has extended the Lunar New Year holiday, closing businesses in key provinces and suspending air and rail travel in a bid to contain the virus.

The US Centers for Disease Control expanded its non-essential travel warning to all of China.