About 70% of the supply in the petroleum market is provided by domestic refineries, the rest is imported from many markets. Many businesses believe that imported petroleum is cheaper, not to mention the buying and selling mechanism is also more flexible.
According to businesses, with the market share structure of state-owned petroleum enterprises accounting for up to 70% of the market, purchasing mainly from domestic sources could push up input gasoline prices.
Many reasons why we still have to import expensive sources
According to the General Department of Customs, Malaysia has become the largest market supplying imported petroleum to Vietnam with 1.4 million tons, worth 1.1 billion USD, replacing South Korea which accounted for the largest proportion in 2023 (over 38%). South Korea ranked second with 1.4 million tons, down 15.7% and reaching 1.1 billion USD.
Singapore ranked third with 1.1 million tons, reaching 955 million USD; followed by China with nearly 495 million tons, worth 414 million USD; and Thailand with 126,334 tons and 107 million USD.
The price of imported gasoline from Thailand is 851 USD/ton, China is 839 USD/ton, Malaysia is 813 USD/ton and South Korea has the lowest price of 780 USD/ton. According to the Ministry of Industry and Trade, in the first 5 months of the year, imported sources accounted for 45.1%, domestic production accounted for 54.8%.
Thus, if calculated by average price, the price of imported gasoline from Singapore is the highest at over 855 USD/ton, but Vietnam still imports a large quantity, ranking third.
Talk to Tuoi Tre , a major petroleum trader in the Mekong Delta, said that the company's domestic purchasing sources account for about 70%, while the remaining 30% is purchased from imported sources. In particular, besides the Korean market, the import sources are quite diverse from Singapore, Thailand, Malaysia, etc., which have also been subject to a 0% tax reduction since the beginning of this year, so they have competitive prices.
Therefore, businesses adjust their import structure to import more goods from ASEAN countries due to the transportation advantage, and can buy smaller quantities than those imported from Korea. However, the supply of gasoline from Korea has the advantage of lower prices than other ASEAN countries, and is imported in large ships, so depending on business needs, businesses will decide to choose the appropriate supply source.
"Every month, suppliers offer prices, and we decide to import goods at the most competitive price. Up to now, the supply of gasoline and oil is very abundant, and the price fluctuations are not due to lack of supply and demand, but mainly due to psychology. Especially when the 0% import tax incentive is applied in ASEAN, we expand our purchasing sources from these countries to suit our business needs," he said.
Another wholesaler in Ho Chi Minh City said that because prices are always fluctuating, "we buy from whoever offers the cheapest price." However, it depends not only on price but also on many factors such as actual purchase volume and contract commitments with domestic petroleum factories.
"For example, we just imported a shipment of gasoline from Singapore. Although the average price is higher, it has many advantages in transportation. In particular, compared to the average price purchased from the sources of supply of two domestic refineries, imported goods are still cheaper," this trader informed.
Buying domestically is more expensive than importing?
According to businesses, the addition of supply from ASEAN markets with tax reductions since the beginning of the year has changed the structure of imports and domestic purchases. Previously, the two The domestic oil refinery is Dung Quat. and Nghi Son meets and accounts for about 70% of the gasoline market share, the remaining 30% is from imported sources.
However, this structure has changed in the first 5 months of this year, partly due to the Dung Quat factory closing for 2 months for maintenance, partly due to more competitive imported gasoline prices. According to a major trader, the average import price into Vietnam in the first 6 months of this year for gasoline was 21,650 VND/liter and DO oil was 18,850 VND/liter, while buying from domestic refineries for RON95 gasoline was 21,700 VND/liter and oil was 18,750 VND/liter.
In addition, the domestic factory premium is fixed at $2.8/barrel for gasoline and $1.3/barrel for diesel. For imports, this cost varies by day and depending on the size of the shipment, but the average price is 80 cents - $1/barrel for oil and $2/barrel for gasoline.
A private oil trader in the South also said that he only buys about 35% of the source from two domestic oil refineries, the remaining 65% is imported. The reason is that imported goods have reduced taxes and are more competitively priced, the buying and selling mechanism is more flexible and proactive, while domestic purchases require long-term contracts, rigid regulations and less competitive prices.
When purchasing domestic gasoline, payment must be made 30 days in advance, according to a fixed formula given by gasoline factories, which is 5-1-5. That is, 5 days before receiving the goods and 5 days after receiving the goods plus 1 day creates the average price of a receiving cycle.
"Not to mention the premium is also higher than the cost of purchasing from foreign sources, so the domestic purchase price is often 10-30% higher than imported goods depending on the time. Enterprises must also commit to purchasing a fixed output for 6 months," said this trader.
Another key trader said that at this time, businesses are negotiating to sign purchase contracts with domestic refineries for the last 6 months of the year, while purchasing from imported sources is by shipment and by month, so prices are more competitive.
"Although the source of goods from domestic refineries is more stable, they can proactively arrange ships to import goods and can divide shipments into smaller batches, but contracts are usually stable continuously for 6 months so prices cannot be cheaper than imported goods," he said.
Private enterprises mainly import Responding to Tuoi Tre, a representative of the Ministry of Industry and Trade said that the fact that businesses reflect that domestic purchase prices are higher than import prices is "one-sided". According to this person, domestic purchase prices are higher than import prices may only happen at certain times, but in general, domestic purchase prices are more profitable and businesses still want to buy more domestically. "The premium cost also depends on many factors, based on domestic prices referring to world prices and the supply situation, because buying domestic goods is more beneficial in terms of transportation and payment in VND," he said. According to data from the Ministry of Industry and Trade, the total supply of petroleum (from imported and produced sources) in the first 5 months of 2024 reached about 10.303 million tons. Of which, imports accounted for 45.13%, domestic production accounted for 54.87%. Notably, while import activities are mainly carried out by private enterprises, domestic purchases are mainly by state-owned petroleum enterprises, accounting for over 60%. |
There must be measures to negotiate domestic gasoline purchase prices. Businesses that import condensate to blend gasoline, kerosene and diesel also complained about having to pay high prices from domestic sources. A leading petroleum trading unit in the South said that condensate is mainly supplied by gas plants and some other businesses. But with the preferential policy in the system, the enterprise with the most competitive advantage in purchasing this source is PVOil. While other enterprises have difficulty accessing the source or have to accept high prices, affecting price competition. According to businesses, with the market share structure of state-owned petroleum enterprises accounting for up to 70% of the market, purchasing mainly from domestic sources could push up input gasoline prices. Therefore, many businesses recommend that businesses should proactively and flexibly create sources according to market realities as well as have measures to control negotiations between domestic oil refineries, avoiding the risks of price pressure and contract pressure that will distort gasoline prices and not follow the market. |
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