Key Points
- Jet fuel exports from Asia to Europe hit a multi-year high in July. The surge is driven by high prices in Europe and a supply glut in Asia.
- Lower shipping costs and strong summer travel demand in Europe are making the trade highly profitable.
- China is a key exporter, as its domestic flight demand has plateaued.
- The high volume of exports is helping to reduce Asia’s oversupply and support regional prices.
Jet fuel from Asia is flooding into Europe, hitting a multi-year high in July as traders ship out their excess supply to cash in on higher prices and strong summer travel demand on the continent.
According to industry data, exporters in South Korea, China, and Southeast Asia are set to ship between 600,000 and 775,000 metric tons of aviation fuel to Europe this month. Some sources say this is the highest volume seen in five years.
The move makes perfect financial sense for Asian suppliers. Jet fuel prices in Europe were, on average, $65 per ton higher than in Asia, making it a very profitable trade. At the same time, the cost to ship the fuel has dropped, making the deal even sweeter.
Europe needs the fuel. The number of daily flights is up 4% from last year and is even higher than pre-pandemic levels. This has caused European fuel stockpiles to fall to their lowest level since February.
China is a major driver of these exports. With their domestic flight demand leveling off, shipping jet fuel abroad remains the most profitable option for Chinese refiners. While the window for these highly profitable shipments might be narrowing for August, the surge in exports is helping to ease Asia’s supply glut and support prices in the region.
