Bangladesh’s Unutilized Refining Capacity Amid Slow Down in Imports

Bangladesh has an installed refining capacity of approximately 3.8 million MT which is dominated by 8 business houses. These 8 groups have multiple refineries in various parts of the country and control nearly 95% of the total installed capacity. Since palm oil is the leading edible oil imported and consumed in Bangladesh since 2003, almost 70% of the refineries in the country can run on both palm oil and soybean oil, whereas, 30% are dedicated soybean oil refineries.

Bangladeshi market is dominated by 3 major edible oil categories; palm oil, soybean oil and rapeseed/canola oil and their market share in the overall consumption is 52%, 40% and 4% respectively. Palm oil and soyabean oil are consumed in refined form, whereas, mustard/canola oil, which are traditional cooking oils and have always been consumed in virgin form.

In the first quarter of 2020, which is generally a lean period for palm oil consumption because of winter, a total 666,473 MT of palm oil and soyabean oil were processed and marketed, out of which 414,056 MT or 62.13% was palm oil and rest 252,417 tonnes or 37.87% was soyabean oil. The total volume of 666,473 MT of oils and fats processed and refined in the first quarter of 2020 in Bangladesh utilized only 18% of the total installed capacity, of which, 11% was used for palm oil and 7% was used for soybean oil. 

The imports of palm oil in Bangladesh started picking up from early March of 2020 which was due to the rise in ambient temperature. However, this trend might get affected due to imposition of MCO to curb the spread of COVID – 19. As gathered from the traders, in the local market, daily trading volume of refined oil has declined by about one third of normal trading day in the 1st half of March and to about half in the 2nd half of March. This trend is likely to continue in the month of April as well which will seriously hamper the additional Ramadan demand of cooking oil, especially palm oil. It is anticipated that both palm oil and soybean oil import in Bangladesh will face decline in second quarter and the quantum of decline will be higher for palm oil since it has larger share in the market.

Prepared by Fakhrul Alam

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