Published on : Sep 29, 2015
The China based purchaser of jet fuel in the Asia Pacific, China Aviation Oil is planning to go back to its core business of aviation fuel after going after a rather aggressive diversification strategy in the past two years.
Economic turbulence in the country as well as falling commodity prices have pushed the company in rethinking its strategy. Meng Fanqiu, chief executive officer of China Aviation Oil, said not long ago that the company has decided that shifting focus towards the expansion of its jet fuel business will result in generating stable returns.
Being the only importer of jet fuel into China, the China Aviation Oil company is presently the biggest physical trader of aviation fuel in the Asia Pacific region.
In 2012, the company revealed a diversification plan of cutting its over dependence on aviation fuel and ventured into fuel oil, gas oil, and petrochemical trading. This strategy helped the firm is gaining profits at a time when the Chinese demand was vibrant and the market was bullish.
However, the trading margins have been rather thin, at times even negative, since last year owing to a slowdown in the economy in China and the low prices.
China Aviation Oil recently let go of its petrochemical trading and is planning on concentrating on jet fuel and globalize its aviation oil business, chief executive officer Meng told the press last week at the company’s corporate briefing held in Singapore.
In 2014, almost 4 million metric tons of jet fuel was supplied to airports outside of China by China Aviation Oil, which made up for around 40 per cent of the overall supply, Wang Chunyan, the chief financial officer of the company said.
The firm will also be investing on infrastructure linked with jet fuel supply, which, Meng said, will provide stability as well as returns for the long term, compared to trading