Bangladesh's Jan HSFO imports seen rising 25% on month as power demand rebounds

Bangladesh expects to import around 250,000 mt of 180 CST high sulfur fuel oil in January, up 25% from December when electricity demand for cooling softened due to mild temperatures, Bangladesh Independent Power Producers' Association president Faisal Karim Khan told S&P Global Commodity Insights Jan. 17.

January HSFO imports are higher than December's due to increasing demand for electricity generation for air conditioning as mild winter weather starts to wane, Khan said.

However, the forecast January imports were still down 37.5% year on year due in part to the ramp-up of coal-fired power plants, he added.

The 1,320 MW Rampal coal-fired power plant initiated generating around 660 MW of electricity from one of its units late December, which will reduce dependency on HSFO-fired power plants, he said.

Bangladesh was also importing 1,020 MW of electricity from India in January, 27.5% higher than a year earlier, state-run Bangladesh Power Development Board data showed Jan. 16.

Around 3,000 MW of Bangladesh's electricity was currently being generated by HSFO, equating to around a third of its total power generation of 9,100 MW during evening peak hours, the data showed.

The country's HSFO import requirements might jump significantly when the winter season fully ends around March and the country will need to generate around 6,000 MW of electricity from HSFO-fired power plants to meet peak summer demand, Khan said.

LNG imports stall

Bangladesh plans to ramp up 180 CST HSFO imports by 22.2% year on year to 5.5 million mt in 2023 to meet rising electricity demand from HSFO-fired power plants as LNG imports have stalled since July 2022 due to high global prices, S&P Global has reported.

Privately-owned power plant operators import most of the HSFO and state-run Bangladesh Petroleum Corporation smaller volumes to run its own power plants and supply other private plants without export capabilities.

BPC's HSFO imports are increasing as more privately-owned power plants have halted HSFO imports since September due delayed payments by the Bangladesh Power Development Board, Khan said.

Bangladesh is a regular buyer of 180 CST fuel oil from Singapore, receiving 63,267 mt from the city-state over Dec. 1, 2022-Jan. 4, 2023 and 173,702 mt over Oct. 27-Nov. 30, Enterprise Singapore data showed.

Pockets of power generation demand from South Asian utilities and a relatively stable bunker market are providing some support to the Asian HSFO market in January, although resilient Russian supplies flowing into the East of Suez markets were expected to weigh on fundamentals for a significant part of 2023, according to market sources.

Platts, part of S&P Global, assessed the Singapore 180 CST HSFO cash differential to MOPS 180 CST HSFO assessments at a discount of $1.67/mt at the Asian close Jan. 17, compared with minus $2.17/mt Jan. 16.

The benchmark Singapore 380 CST HSFO cash differential to MOPS 380 CST HSFO assessments was assessed higher for a second straight session at the Asian close Jan. 17 at a premium of $2.25/mt, up from 83 cents/mt Jan. 16.