Japan-bound airlines face supply challenges even before IMO 2020

While some airlines have only recently discovered the International Maritime Organization, many had already experienced the most acute supply shortage of jet fuel in recent memory last winter when they flew to Japan. But before airlines even start to feel the potentially game-changing impact of IMO 2020 on the aviation industry, they may have to grapple with a more immediate challenge — jet fuel tightness in Japan — this coming winter, again. One airline from the greater China region had to lower its load factor when flying to Japan last winter so it could take more fuel for the return flight because it was not able to adequately refuel at Japanese airports. The aviation industry competes with Japan’s residential and commercial heating demand for kerosene, which typically shoots up in winter to 2.2 million-2.3 million mt/month over December-January and then declines to 350,000-400,000 mt/month over July-August, the hottest months of the year. Such drastic swings in heating kerosene demand typically give refiners a run for their money. They respond by building heating kerosene stocks long before winter in storage facilities in Japan and nearby South Korea. In the process, they maximize production of heating kerosene at the expense of jet… continue reading

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Source: CTRM Center

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