Vietnam is set to import nearly three to four times more diesel in March and April than in February, as importers seek additional volumes to fill a demand build-up after an import tax was scrapped this month, industry sources said on Tuesday.
The country's top oil importer and distributor, Petrolimex, and state-owned oil marketer, PV Oil, are seeking a total of 78,000 tons of gasoil for delivery over March and April in two separate tenders, they said.
This is in addition to the 96,000 tons of gasoil already purchased by Petrolimex, PV Oil and Saigon Petro, for March and April.
With gasoil prices hovering at their highest in more than 10 months, driven mainly by higher underlying crude prices, Vietnam had stayed away from the international market for the early part of this year.
In February, Saigon Petro bought just 16,000 tons of gasoil while Petrolimex skipped spot purchases. Petrolimex had also skipped term imports of gasoil in the first quarter of 2012, due to lower demand caused by slower economic growth.
"When prices are up, importers just wait and use their inventory to serve the market; when prices go down they will import again, but you can't wait so long," said a source based in Vietnam, referring to the renewed buying from importers for March and April in order to meet pent-up domestic demand.
Petrolimex is expected to seek gasoil for the second quarter of this year soon.
Vietnam scrapped the import duty on diesel in the beginning of March, after it let fuel distributors raise retail prices of petrol and oil products by up to 12 percent.
While the rise in retail prices is still inadequate for importers to break even on diesel and gasoline sales, the higher prices make it more attractive for retailers to sell the products, in turn driving up demand, industry sources said.
For retailers to break even, retail prices have to rise VND6,000 (29 cents) per liter instead of the increase of VND1,000 per liter made by the government, they added.
Rising oil prices pose a risk as transport prices contribute nearly 10 percent to Vietnam's basket of consumer prices, bank ANZ said in a report early this month.