Spring Festival travel rush to boost China's gasoline, jet fuel recovery

China's gasoline and jet fuel demand is set to recover in January from the previous year, as the country reopens for the "Spring Festival travel rush", but the volumes are seen below the pre-COVID levels in 2019, Chinese government officials and analysts said Jan. 6.

The initial estimation showed passenger travels during the Spring Festival travel rush to amount to 2.095 billion, jumping 99.5% year on year to hit 70.3% of the level in the same period of 2019" said Xu Chengguang, Vice Minister of the Ministry of Transportation, during a press conference held by the State Council Information Office in Beijing Jan. 6.

Civil Aviation Administration of China has set to lift the daily flights to 11,000 during the period to reach 73% of the pre-COVID level in 2019, the Vice Chief Pilot of CAAC Wan Xiangdong said in the same event.

Spring Festival refers to Lunar New Year in China. The travel rush is the typical transportation peak in the country as Chinese return home or go vacation for a seven-day long holiday. The Spring Festival travel rush officially sets in Jan. 7- Feb. 6 for 40 days in 2023.

The COVID-19 outbreak had dampened travel since 2020, while the government imposed travel restrictions in 2021 and 2022 to limit the spread of the pandemic during the holidays.

As Beijing eased domestic movement controls in December and is set to reopen the border on Jan. 8 amid the downgrade of COVID-19 from the top tier of infectious diseases to a second tier, China's transportation and people movements recover as the COVID cases have peaked in most of the big cities lead by Beijing and Guangzhou, market sources said.

"The ministry's estimation is encouraging, indicating strong rebounds in gasoline and jet fuel demand. But it is too early to come to a conclusion of the upcoming travel rush as the current railway and air ticket sales remain modest," said Sun Sijia, an analyst with S&P Global Commodity Insights.

S&P Global has projected China's gasoline and jet fuel demand to rise by 4% and 15% on the month, respectively in January, which would be about 91% and 53% of the volume in February 2019 when the Lunar New Year fell in. "People would prefer to drive private cars instead of taking public transportation to avoid infection, so that we would see a stronger recovery in gasoline demand," Sun added.

"Some uncertainties remain as we are not sure if the second wave of infection with new varietal coronavirus comes soon after the current wave when reopening the border and spread fast during the travel rush. And quite a few cases infected in this wave require longer time to recover, dampening traveling interest," a Beijing-based analyst said, adding that some proportion of university students and factory workers have been sent home, which also caps the travel recovery.