Shanghai bans private cars on roads to stem Covid surge

China's financial hub of Shanghai will ban all private vehicles on roads except for service cars from 13 April as part of Covid-19 prevention measures, a move that is likely to further cut Chinese transport fuel demand.

The measure is likely to prevent residents from trying to leave the city, especially as train tickets to major adjacent cities are sold out for the next five days after Shanghai announced that it will partly ease lockdown restrictions. This came after it divided areas in the city into three risk categories.

Cases from the city are spreading to multiple Chinese provinces, an official at China's National Health Commission said.

Chinese cities are struggling to contain the spread of the Omicron variant, leading to extended lockdowns and reductions in fuel demand. Gasoline demand is on course to contract by 170,000 b/d in March-April, Argus estimates, which would leave 2022 oil demand 90,000 b/d lower than expected.

Some Shanghai residents left the city even during a full lockdown from 1-11 April. A person who tested positive for Covid-19 moved freely within Weinan city in Shaanxi province after arriving from Shanghai on 11 April by hiding their travel history, local Weinan police reported. Weinan requires a two-week centralised isolation period for anyone arriving from cities with medium- to high-risk areas.

More than 73pc of the 374 cases from 10 March to 11 April in Suzhou city of Jiangsu province, some 80km from Shanghai by car, were transmitted from Shanghai, according to Gu Haidong, deputy mayor of Suzhou. Suzhou has completed a round Covid-19 testing for its 10mn residents. Suzhou is going through its most severe outbreak in the year with cases spreading in most districts, city authorities said on 13 April. A part of Kunshan, an industrial city in Suzhou with a population of over 2mn, has extended lockdown restrictions by a week to 19 April.

Shanghai reported 26,330 local infections on 12 April and city authorities estimate that case numbers will remain high for a while. China is trying to maintain strict Covid-19 restrictions in Shanghai because cases from the city account for over 87pc of total cases so far in April and infections in regions outside Shanghai are reducing or "mostly under control", an official at the National Health Commission said.

Residents from places in Shanghai with looser restrictions have been asked to avoid neighbourhood areas. Some areas allow one person from each family to go out once a day using temporary passes, mostly for food supplies.

Lockdowns and road closures during the month have significantly disrupted logistics despite China's state council warning that freight trucks should not be arbitrarily restricted from moving. Mail package volumes in Jiangsu have decreased by about 60pc in April and mail services might resume in 1-3 weeks, according to the Jiangsu provincial postal administration.

A trader in east China is concerned that the logistics disruptions will affect material and part deliveries to factories for their production lines, some of which run on diesel. This is likely to further weigh on diesel consumption. Diesel demand is on course to fall by 125,000 b/d in March-April as over 30 Chinese cities have been affected by lockdowns, Argus estimates.