Product tankers are seeing a short-term boost from jet fuel shipments from Asia to Europe where air travel has picked up faster following the Covid-19 pandemic, according to shipbroker Gibson.
Global air traffic has reached 70% of pre-pandemic levels but the rebound has been patchy with China lagging the West owing to its continued travel restrictions.
The slower recovery of air travel in China has led to 9.45m tonnes of jet fuel being shipped from the East of Suez to Europe since January 2022, the broker said in its weekly tanker report.
“This is due to much stronger demand fundamentals in Europe compared to producers in Asia such as China which continue to experience mobility restrictions and a weaker recovery in international air travel,” it said.
Jet fuel stocks held in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub have increased by 55% so far this year, affecting ticket prices and adding to the turmoil of this summer’s flight cancellations and airport chaos.
But “pent up post Covid-19 demand has been and continues to be strong enough to offset higher ticket prices for the time being,” it said in its note.
The war in Ukraine has had little impact with Russia’s jet fuel exports representing only 1.4% of its clean petroleum products.
“The bulk of jet fuel volumes to Europe will continue coming from producers such as India, the Middle East, and the Far East. This in turn will support tonne mile demand and larger product tankers heading west,” said Gibson.
“However, as the summer season passes, we are likely to see some rebalancing of the market as travel demand in Europe eases off and Asian demand improves.
“This could reduce some of the flow from East to West, but product tankers will still be able to find support from the fact that Europe is net short in jet fuel and this will necessitate the continued import of the demand balance from further afield.”
