Bangladesh to cut high sulfur oil imports in September as utility demand eases

• Will import 33.3% lesser HSFO on month in Sep
• Monsoon lowers temperatures, weakening power demand
• Govt slows clearing dues to HSFO power plant owners

Bangladesh will trim imports of high sulfur fuel oil (HSFO) by a third in September due to reduced demand from the power generation sector as ongoing monsoonal rains have brought down peak summer temperatures, Faisal Khan, the president of Bangladesh Independent Power Producers' Association, told S&P Global Commodity Insights.

The country is likely to import 250,000 mt of 180 CST HSFO with 3.5% sulfur content during September, down 33.3% compared with about 375,000 mt HSFO imported in August, Khan said.

Bangladesh's HSFO imports rose sharply in August as power plant operators got paid their outstanding dues in dollars from the government, S&P Global reported earlier.

But now again the government's slowing down of clearing outstanding payments to power plant owners, most of whom are also HSFO importers, could play a key role in cutting down fuel oil imports this month, Khan added.

The September HSFO import volume will be nearly 29% lower compared with September 2022, when the country imported around 350,000 mt HSFO.

The Asian HSFO market is expected to remain under pressure in the near term as the end of peak summer power generation demand in the Middle East pushes more barrels toward Asia, but traders said limited availability of non-Russian cargoes would help support the market.

Platts assessed the benchmark Singapore 380 CST HSFO cash differential lower for the third straight trading session at the Mean of Platts Singapore 380 CST HSFO assessment plus $4.50/mt Sept. 18, the lowest since June 30 when it was assessed at MOPS 380 CST HSFO assessment plus $2.45/mt, S&P Global data showed.

The Singapore 180 CST HSFO cash differential was at MOPS 180 CST HSFO assessments plus $7.75/mt Sept. 18, down from MOPS 180 CST HSFO assessments plus $8.67/mt in the preceding session.

Bangladesh, a regular buyer of 180 CST fuel oil from Singapore, imported about 111,355 mt HSFO from Singapore in the last four weeks between Aug. 17 and Sept. 13, down nearly 29% from 156,017 mt in the previous four weeks, latest Enterprise Singapore data showed.

Alongside the drop in HSFO imports, Bangladesh plans to import one spot LNG cargo in September, down from two spot LNG cargoes it imported in August, said a senior official at state-owned gas company PetroBangla.

The country, however, will import five-term LNG cargoes in total during September, in line with August inflows, the official said.

Bangladesh's total generation capacity from oil-fired power plants is around 7.482 GW, of which 6.441 GWs are HSFO-fired and 1.041 GWs are diesel or 0.005% sulfur gasoil-fired plants. They account for around 31% of the aggregate installed capacity of 24.143 GW, according to data from the state-run Bangladesh Power Development Board (BPDB).

HSFO is used for generating electricity in Bangladesh and the country's private sector imports the major share to run their power plants, while state-run Bangladesh Petroleum imports the remaining.

The country's overall power generation is currently hovering around 12.6 GW during peak evening demand, which is around 6.66% lower than the average peak evening generation of 13.5 GW in August, according to BPDB data.