Bangladesh will import 12% more high sulfur fuel oil in August than in July due to strong demand from its power sector, industry sources said recently.
It expects to import around 280,000 mt in August, up from around 250,000 mt in July, as the country is coping with the 'new normal' during the coronavirus pandemic, president of Bangladesh's Independent Power Producers' Association, or BIPPA, Imran Karim told S&P Global Platts on July 23.
Electricity demand has been increasing in Bangladesh -- one of the major buyers of 180 CST HSFO from Singapore -- with the easing of lockdown restrictions. It has almost doubled its HSFO import since June to around 220,000 mt/month, compared with 100,000 mt/month in April and May, as businesses resumed operations, albeit limited in scale, following the three-month long lockdown due to the coronavirus pandemic, Karim said.
The country's import of HSFO is expected to increase steadily into September, he added.
Meanwhile, "about seven to eight MR-sized HSFO cargoes are likely moving from Singapore to Bangladesh for loading in July. Normally it is two to three cargoes," a fuel oil trader said.
The FOB Singapore 180 CST HSFO market has been strong since early June, with its cash differential climbing to a premium of 19 cents/mt on July 9, the highest since March 17, when it was assessed at 25 cents/mt. The cash differential averaged minus $3.74/mt in June, which rose to minus $2.39/mt over July 1-24, Platts data showed.
The cash differential is the difference between its physical cargo and swap values, and an indicator of strength or weakness with respect to supply and demand fundamentals.
Bangladesh imported around 3.2 million mt of HSFO with 3.5% sulfur during the fiscal year 2019-20 (July-June) of which 2.90 million mt were imported by the private sector to run their power plants, while the remaining 300,000 mt by state-run Bangladesh Petroleum Corporation, or BPC.
The country's HSFO import in FY2019-20 is almost similar to its import during FY2018-19, Karim said.
Bangladesh has around 5,700 MW capacity HSFO-fired power plants, of which 4,500 MW capacity HSFO-fired power plants are owned by the private sector, while the remaining 1,200 MW capacity is publicly-owned.
ERL RESUMES OPERATIONS AFTER CLEARING HSFO STOCKS
Bangladesh's lone 1.4 million mt/year capacity crude oil refinery owned by Eastern Refinery Ltd, or ERL, resumed operations on June 27 after Summit Group -- the country's largest private power company -- took around 10,000 mt of HSFO from ERL's storage facility, the refinery's managing director Md Akterul Hoque told Platts.
ERL, a wholly-onwed subsidiary of state-run Bangladesh Petroleum Corporation, was shut on June 20 due to a lack of available tank space. The country did not have sufficient storage capacity to store oil products, especially HSFO, Platts reported previously.
Bangladesh's HSFO consumption fell drastically due to the coronavirus pandemic and the resultant lockdown, from March 26 to May 30, restricted almost all types of transportation including air, rail, public transport as well as movement of private vehicles with the exception of some critical travel services being offered during this period. Consumption of HSFO, a leading product from the ERL, had plunged due to limited operations of state-owned HSFO-fired power plants during the lockdown.
As a consequence, BPC had to cancel one 100,000 mt Murban crude oil term cargo from Abu Dhabi National Oil Company, or ADNOC, in June, Platts reported previously.
