China lifts Wuhan lockdown as Covid-19 outbreak fades

China has lifted all remaining transportation curbs in Wuhan, boosting fuel demand and economic growth in the city where the global Covid-19 pandemic first emerged.

Authorities in Wuhan today allowed healthy residents to leave the city by train and airplane for the first time since the lockdown was imposed on 23 January amid the intensifying epidemic, and also removed broader restrictions on internal movement.

The end to the lockdown is likely to boost local fuel demand and help reduce inventories, which have built up as demand has slumped.

The number of vehicles on Wuhan's roads has already risen, as some internal restrictions were relaxed in recent weeks. The total number of vehicles on city roads at any one time has risen by 400,000 in the past two weeks to as high as 1.24mn, although this is still just half typical levels before the lockdown was imposed. Vehicle traffic may rise to 1.8mn over the next week now that the curbs have been lifted, according to Wuhan's traffic management bureau.

The upturn in driving is already helping boost prices, with PetroChina raising diesel prices in Wuhan by another 2pc to the maximum allowed level of 5,620 yuan/t ($106/bl) today. The government controls how much retail fuel prices can rise and fall in China, which has left domestic product prices well above international levels despite the slump in crude markets.

Fuel sales in Hubei slumped by as much as 80pc in the immediate aftermath of the quarantine measures, according to market estimates. Provincial demand figures are unavailable, but gasoline and diesel consumption in Hubei is estimated at around 200,000 b/d.

The fall in sales affected over 250,000 b/d of planned crude demand from state-controlled Sinopec's 170,000 b/d Wuhan and 112,000 b/d Jingmen refineries in the province. Refinery runs across China started rising again in March after falling by over 3mn b/d in February, but activity in Hubei likely lagged the wider recovery. Current run rates at the province's refineries are unclear.

Around 130 flights were scheduled to depart from Wuhan's Tianhe airport today, still well down on average levels of 600 a day before the lockdown. Jet fuel demand at the airport is around 20,000 b/d at normal capacity.

Industrial activity is also resuming. Over 80pc of businesses in Wuhan had restarted as of last week, although just 40pc of workers were active, according to provincial figures. Work has just resumed on an expansion of the Wuhan Petrochemical project, a joint venture between state-controlled Sinopec and South Korean firm SK, in line with a government push to restart project constructions to support economic growth. The project ramped up its cracker to full capacity today.





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