China cuts lunar new year travel forecasts again

China's transport ministry is expecting a big fall in travel during the lunar new year period, threatening further cuts to gasoline and jet fuel demand.

Passenger travel will see a "significant decrease" to a total of around 1.15bn journeys, or a daily average of about 28.8mn during the 40-day chunyun lunar new year travel period that starts today, a transport ministry official said. This would be down by 20pc from the lunar new year in 2020 and more than 60pc lower than in 2019, the last holiday period that was not affected by Covid-19.

The latest forecast is also significantly lower than the 1.7bn journeys that the transport ministry was predicting as recently as last week.

The Chinese government has been calling for people to cancel trips back to their home towns over the lunar new year in an attempt to cut social interactions following the country's worst outbreak of Covid-19 in 10 months. Strict quarantine measures and health checks have further deterred travel. This may send passenger demand even lower than the latest forecasts, the transport ministry official said.

Over 52pc of scheduled daily flights — 7,749 of 14,709 — had been cancelled across China as of 17:30 today, according to Chinese flight data provider Variflight. Rail passenger numbers today are expected to be 66pc lower than the corresponding day last year, at around 4mn, State Railway said.

The curbs will weigh on transportation fuel demand in what is typically a peak period. Road passenger volumes — an indicator of demand for road fuels, especially gasoline — usually rise by over 20pc month on month in the chunyun period, national bureau of statistics data indicate. Gasoline demand hit 3.11mn b/d in January-February 2019.

Road passenger volumes slumped by more than 80pc in last year's chunyun period compared to a month earlier as China imposed the world's first nationwide Covid-19 lockdown.