Asia's jet fuel imports from India to hit multi-yr high in Nov, shows data

 

Asia's imports of jet fuel from India are set to hit multi-year highs in November ahead of peak winter demand after refinery outages and lower exports from China crimped supplies, according to industry sources and shiptracking data.

Indian refiners have been processing large volumes of cheap Russian crude since the start of the Ukraine war in 2022 and have the flexibility of boosting fuel exports to either Europe or Asia depending on arbitrage economics.

Indian aviation fuel arriving in hubs including Singapore, Hong Kong and Malaysia will probably hit around 2.7 million barrels in November, up at least 40% from October, shiptracking data from LSEG, Kpler and Vortexa showed, the highest since Kpler began compiling the data in 2017.

More than half the jetfuel was bound for Singapore, according to Vortexa data.

The jump in supplies from India will add to an expected rebound in output within Asia as refineries resume operations after maintenance. That could weigh on spot premiums as buyers will need some time to digest the cargoes, trade sources said.

India's jet fuel pivot to Asia is probably the result of the closure of the arbitrage window to Europe, said Vortexa's head of APAC analysis, Serena Huang.

"Seasonal kerosene stockpiling in Japan coupled with refinery outages (in Malaysia) over the past months have likely tightened supplies in Asia, presenting opportunities for more Asian jet/kero supplies to stay within the region rather than heading to the West," she added.

Malaysia's jet fuel exports were at multi-year lows of 150,000 barrels so far in November, Vortexa data showed, while Japan's imports of jet fuel and kerosene are expected to hit nine-month high at 1.34 million barrels.

Supply tightness was exacerbated by traders selling more Asian cargoes to the U.S. west coast amid lucrative arbitrage profits given lower production there from refinery outages, said another trader who is sending at least 450,000 barrels of fuel to the U.S in November.

Weaker-than-expected aviation fuel demand and high production led to a ready supply of India barrels, said LSEG Oil Research senior analyst Charles Ong, adding that September consumption levels in India were still 16% below pre-pandemic levels.

Whether India's jet fuel shipments to Asia remain high in December will depend on European demand and the impact on Chinese exports from lower tax rebates taking effect next month, a Singapore-based trade source said.

China's jet fuel exports dropped to a 10-month low of 1.45 million metric tons (11.4 million barrels) in October, customs data showed, while trade sources estimated similar volumes for November.

Earlier, Chinese oil majors ramped up gasoline exports at the expense of jet fuel for higher profits, a China-based trade source said, while key fuel supplier China Aviation Oil had issued rare tenders to buy November spot cargoes due to tight export quota availability.