March 16, 2020 / 12:01 PM / 19 days ago

Asia Distillates-Jet fuel cracks crumble to below $5 as coronavirus rattles global aviation

    SINGAPORE, March 16 (Reuters) - Asian refining margins for jet fuel dropped on Monday,
slumping to their lowest in more than a decade, as airlines around the world continued to scale
back flights amid extensive travel restrictions due to the coronavirus pandemic.
    Refining margins, also known as cracks, for jet fuel plunged to $4.71 per
barrel over Dubai crude during Asian trade on Monday, the lowest on record as per Refinitiv
Eikon data that goes back as far as March 2009. They were at $7.70 per barrel on Friday.
    Cracks for the aviation fuel grade have shed over 68% since the beginning of this year as
the jet fuel market suffered unprecedented losses due to the virus, which has caused strings of
flight cancellations across regions.
    Three major airline alliances — Star, SkyTeam and oneworld — on Monday jointly called on
governments and stakeholders to extend extraordinary support to airlines to alleviate pressure
caused by the coronavirus outbreak.
    Asian refiners may be forced to curtail jet fuel output due to further weakening demand. Jet
fuel typically cannot be stored for long periods of time as its quality could degrade, which
increases the incentive for refiners to produce less of the fuel.
    Cash discounts for jet fuel JET-SIN-DIF widened 35 cents per barrel to Singapore quotes on
Monday, compared with a discount of 10 cents per barrel on Friday.
    Meanwhile, cash differentials for 10 ppm gasoil GO10-SIN-DIF flipped to a narrow discount
of 1 cent per barrel to Singapore quotes, hurt by a weaker deal in the physical market. The
gasoil cash differentials were at a premium of 10 cents on Friday.
    Refining margins for gasoil with 10 ppm sulphur content fell by $1.79 to $8.84
per barrel over Dubai crude during Asian trading hours on Monday.
    - China's daily refinery throughputs dropped 4.8% in the first two months of the year,
sliding to the lowest level since December 2018, as the coronavirus outbreak cut deep into
production in February.
    - Output was 99.19 million tonnes in January and February, data from the National Bureau of
Statistics showed on Monday. That was equivalent to 12.07 million barrels per day (bpd) on
average, according to Reuters calculations, down 12% from December's record of 13.78 million
    - Refinery output, however, was expected to recover in March, led by independent plants
which saw margins improving with a revival in demand beginning as the epidemic appeared to be
reined in.
    - One gasoil trade, one jet fuel deal
    - For more information, click
    - U.S. crude fell below $30 on Monday as emergency rate cuts by the U.S. Federal Reserve and
its global counterparts failed to tame markets and China's factory output plunged at the
sharpest pace in 30 years amid the spread of the coronavirus.
    - A fire killed five people at a refining and petrochemicals complex in southern Malaysia
owned by Petronas and Saudi Aramco, authorities said on Monday. It was the second fire in less
than a year at the $27 billion Pengerang Integrated Complex (PIC) in Malaysia's southern state
of Johor.
 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close   RIC
 Spot Gas Oil 0.5%                39.26    -4.57     -10.43        43.83  GO-SIN
 GO 0.5 Diff                      -1.94     0.06      -3.00        -2.00  GO-SIN-DIF
 Spot Gas Oil 0.25%               39.50    -4.63     -10.49        44.13  GO25-SIN
 GO 0.25 Diff                     -1.70     0.00       0.00        -1.70  GO25-SIN-DIF
 Spot Gas Oil 0.05%               40.19    -4.64     -10.35        44.83  GO005-SIN
 GO 0.05 Diff                     -1.01    -0.01       1.00        -1.00  GO005-SIN-DIF
 Spot Gas Oil 0.001%              41.19    -4.74     -10.32        45.93  GO10-SIN
 GO 0.001 Diff                    -0.01    -0.11    -110.00         0.10  GO10-SIN-DIF
 Spot Jet/Kero                    36.60    -6.09     -14.27        42.69  JET-SIN
 Jet/Kero Diff                    -0.35    -0.25     250.00        -0.10  JET-SIN-DIF
 For a list of derivatives prices, including margins, please double                       
 click the RICs below.                                                    
 Brent M1                                                                                 
 Gasoil M1                                                                                
 Gasoil M1/M2                                                                             
 Gasoil M2                                                                                
 Regrade M1                                                                               
 Regrade M2                                                                               
 Jet M1                                                                                   
 Jet M1/M2                                                                                
 Jet M2                                                                                   
 Gasoil 500ppm-Dubai                                                                      
 Cracks M1                                                                
 Gasoil 500ppm-Dubai                                                                      
 Cracks M2                                                                
 Jet Cracks M1                                                                            
 Jet Cracks M2                                                                            
 East-West M1                                                                             
 East-West M2                                                                             
 LGO M1                                                                                   
 LGO M1/M2                                                                                
 LGO M2                                                                                   
 Crack LGO-Brent M1                                                                       
 Crack LGO-Brent M2                                                                       
 (Reporting by Koustav Samanta; Editing by Sherry Jacob-Phillips)
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