Seoul — South Korea's refined oil product exports in October fell 22.8% from a year earlier as jet fuel shipments dropped to the lowest level in almost 13 years, with the prolonged coronavirus pandemic putting air travel close to a standstill, according to data released Nov. 25 by Korea National Oil Corp.
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The major Asian fuel exporter shipped out 33.8 million barrels, or 1.09 million b/d, of oil products in October, compared with 43.79 million barrels a year earlier, the data showed.
The October exports marked the seventh consecutive decline in the country's oil products shipments. The export volume of 33.8 million barrels also marked the smallest monthly shipments in more than six years.
Jet fuel is one of South Korea's key petroleum export items but the dismal Asian and international aviation sector would continue to paint a bleak overseas sales outlook for South Korean oil products suppliers, an official at KNOC said.
The Asian jet fuel complex continued to bear the brunt of the coronavirus pandemic. While domestic flights in some countries like China, India and Vietnam has seen some recovery, international flights are still seeing lackluster demand due to strict border controls, or onerous travel restrictions.
South Korea's jet fuel exports plunged 65.1% year on year to 3.63 million barrels in October, which marked the seventh consecutive decline. The export volume of 3.63 million barrels was also the lowest level since January 2008, when the country shipped out 3.05 million barrels.
Over January-October, jet fuel exports dipped 24.9% year on year to 73.68 million barrels.
South Korea's jet fuel exports are likely to remain weak for the rest of the year as the prolonged pandemic would continue to curb air traffics to and from Asia, officials at KNOC and Hyundai Oilbank said.
Singapore Airlines Group, for one, reported in mid-November that passenger carriage demand plunged 98.1% year on year in October as border controls and travel restrictions remained in place in most countries. The plunge in the overall passenger carriage, measured in revenue passenger-kilometres, caused the group passenger load factor to come in at 15.8% in October. This marked a year-on-year decline of 68.6 percentage points.
Similarly, Cathay Pacific and the now defunct Cathay Dragon carried only 38,541 passengers in October, marking a 98.6% plunge from October 2019, adding that much of the student travel demand throughout the summer season tapered off in early October.
"Two of Asia's biggest carriers posting poor passenger numbers ... that's never a good sign for [jet fuel] exporters. Refiners often take major airlines' passenger numbers to work out the monthly refinery linear programming model and jet fuel yield would be kept to a minimum," said a fuel marketing manager at Hyundai Oilbank.
Other transport fuel sales
South Korea's exports of gasoil/diesel, its biggest shipment item, declined 5.9% year on year to 15.95 million barrels in October. Gasoline exports also fell 0.4% year on year to 6.45 million barrels in October, which marked the eighth consecutive decline.
Apart from the movement restriction measures put in place across various Asian countries, competition from Chinese light and middle distillate suppliers could also hamper South Korean refiners' motor fuel sales in the Asian market over the next few trading cycles, the KNOC official said.
China's state-owned oil companies plan to raise their gasoline and gasoil exports in November by about 3% from October to 3.29 million mt, Platts reported previously.
In addition, China has allocated a fresh round of oil product quotas in an effort to cut bulging domestic stocks. China's Ministry of Commerce has recently issued a third round of oil product export quotas for 2020 totaling 3 million mt under the general trade route to CNPC, Zhejiang Petroleum & Chemical and China North Industries Corp., or Norinco.
South Korea's oil product exports (Unit: '000 barrels)