GTHT released a research report stating it maintains an overweight stance on aviation and oil shipping. For aviation, the firm continues to be optimistic about the long-term logic of a super-cycle, citing market-based ticket pricing and low supply growth. Stimulating consumption is expected to further improve the supply-demand balance. The report highlights a counter-timing opportunity amid geopolitical oil price pressures. For oil shipping, its strategic value is becoming prominent, with the value of China's fleet expected to exceed expectations. Global inventory replenishment will sustain high industry prosperity, and changes in the grey market could lead to a super-high and sustainable boom. GTHT's main views are as follows:
Aviation: Despite high oil prices, aviation demand (volume * price) continues to grow. It is advised to adopt a counter-cyclical overweight strategy during the off-season. The Q2 market is in its traditional low season, and high oil prices can only be partially passed through. Airlines find it difficult to stimulate passenger traffic with low fares, leading to a reduction in price-sensitive travelers. The recent trend of flight reductions and fare increases continues. The firm estimates that last week's industry passenger traffic decreased by nearly 10% year-on-year, while load factors remained high. Domestic base fares maintained positive growth, and estimated all-in fares (including fuel surcharges) remained up about 20% year-on-year. A key point is that under high oil prices, aviation demand (volume * price), representing household aviation consumption expenditure, still shows significant year-on-year growth. This is better than market concerns about demand weakening based solely on passenger traffic changes. The report notes that the upcoming national college entrance exams will briefly impact travel demand. Advance bookings for the summer travel peak have not yet started. After the exams conclude in mid-June and the summer travel season begins, expected improvements in supply-demand dynamics and oil price pressures should enhance airlines' ability to pass through fuel costs. It is noted that the significant fare increases on China-Europe routes provide airlines like Air China with oil price hedging capabilities exceeding the industry average. Boeing orders do not change the expectation of low fleet growth for Chinese airlines. High oil prices and the seasonal trough offer a counter-timing opportunity.
Domestic Aviation Fuel Price: Downward adjustment in June, easing pressure before peak season. The domestic ex-factory price for aviation fuel is linked to the average Singapore jet fuel price from the previous month, determined by the National Development and Reform Commission (NDRC) at the beginning of each month using a formula. Therefore, international oil price changes from April 2026 are transmitted domestically. While the NDRC has implemented controls to suppress increases, the domestic aviation fuel price in May still rose approximately 111% year-on-year, significantly higher than the 80% increase in international crude oil prices in April. The reason is that the Singapore jet fuel crack spread over crude oil, historically $10-20 per barrel, surged to $80-90 per barrel in March-April due to supply disruptions and panic in the Gulf. Since May, while crude oil prices remain above $100, Singapore jet fuel prices have fallen over 20% as the crack spread narrowed to below $50 per barrel. Recent airline announcements of domestic fuel surcharge reductions to 80/150 yuan (from 90/170 yuan in May) effective June 5 confirm the downward adjustment in the domestic aviation fuel ex-factory price for June. It is expected that airline fuel cost pressure will begin to ease before the peak season.
Oil Shipping: Expectations for Strait passage recovery strengthen; global restocking and grey market changes are anticipated. The oil shipping industry's two-phase upcycle from 2022-2025 is entering a super bull market. Short-term: The US and Iran plan to extend a 60-day ceasefire, aiming to gradually restore commercial vessel traffic through the Strait to pre-conflict levels within a month. Last week, vessel transits through the Strait of Hormuz increased 15% week-on-week (to 7% of February's level). Exports from the US Gulf and South America hit new highs, and global seaborne crude oil volumes increased 1% week-on-week. Spot freight rates for oil tankers saw a slight decline, but VLCC one-year time charter rates remain above $120,000 per day. Chinese shipowners' operational efficiency is expected to continue outperforming the industry, with Q2 results likely to exceed expectations again. Medium-term: Global crude oil destocking over the past three months has reached a historical record. If the Strait passage recovers, oil tanker capacity utilization is expected to return to high levels. Coupled with production increases, inventory replenishment, and market control by long-term players, high prosperity could be sustained. Long-term: If sanctions on Iran are lifted, its exports would shift to compliant demand. The related shadow fleet would struggle to transition back, potentially creating a super-high, sustainable boom in oil shipping lasting several years, offering room for both earnings growth and valuation expansion.
Risk warnings include economic fluctuations, geopolitical oil prices, tariffs, exchange rates, and safety incidents.
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