China Aviation Oil is seeking short-term jet fuel supplies, while forecasts predict an avgas biofuel boom by 2020.
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CAO (Singapore Asia's top jet fuel buyer, is looking to fulfil its fuel needs for April and May after China raised diesel prices between 6% and 7% in March. This left analysts speculating that refiners could be encouraged to maximise yields of diesel compared with jet fuel or kerosene and thus result in an avgas shortage.
The company is looking 25,000 to 26,000 tonnes (around 200 -208,000 barrels) of jet fuel for delivery at the end of April, as well as four 240,000-300,000 barrel cargoes from early May, from South Korea, Japan, Taiwan, Singapore, Malaysia and Thailand. The fuel would be delivered into Huangpu, China. The company has already bought some 1.2m barrels around the end of March.
Although the fuel currently shipped by CAO will be standard avgas, a recent report forecasts that as much as 30% of China's aviation fuel consumption will be met by usinng biofuel by 2020. With China's Civil Aviation Administration targeting a 22% greenhouse gas reduction by that year, from 2005 levels, the biofuel market would be worth around $19bn, or 12m tonnes.