China’s refiners have emerged as major exporters of jet fuel in recent years, with volumes this year expected to rival the surge in 2024. East–west price spreads make it profitable to send surplus product to Europe and the US, where demand remains robust. Yet, this strength is deceptive. The export boom reflects weak domestic demand for gasoline and diesel, forcing refiners to pivot output toward aviation fuel. If teapot refinery consolidation proceeds, exports could taper, indicating the trend is less about China’s global market power and more about coping with structural challenges at home. Middle Eastern producers are watching closely, but the long-term challenge may not be as severe as headline volumes imply.
SAF: A Small Slice With Big Potential
Where China does look strategically stronger is in Sustainable Aviation Fuel (SAF). Although SAF still accounts for only about 1% of total aviation fuel, China is well-positioned thanks to abundant feedstocks like used cooking oil. Exports have already begun, and the country is establishing itself as a credible force in this emerging space. The momentum in SAF aligns with broader global energy transition policies. In Europe, despite short-term political backlash against transition costs, long-term commitments remain intact. Mandatory SAF blending requirements, already in effect at 2%, signal that investors can count on policy durability. The combination of Europe’s policy certainty and China’s resource advantage could accelerate SAF’s role in aviation, pointing to a future where competition shifts from fossil jet fuel toward cleaner alternatives.