Heavy industrial enterprises must find a way to deal with the burden of petrol fees. Photo: VNA

The increase in gasoline prices is beyond the calculations

In less than two months, the retail price of gasoline in the country has been adjusted 5 times in a row due to the impact of the world market.

Currently, gasoline prices are fluctuating in the range of VND25,532 - 26,287/liter, up 52-56% over the same period in 2021.

Similarly, oil price also fluctuates VND17,932 - 20,801/liter, up 42-64% compared to the same period in 2021.

This causes headaches for businesses in the field of heavy industry. This field has to transport vehicles with large loads, so it also uses more fuel.

A representative of an enterprise specializing in the production and trading of building materials said that the cost of gasoline accounts for 40% of the cost of each transport vehicle, the higher the price of petrol is, the more the business has to make up for losses due to high prices.

Similarly, a representative of Viet Thang Co., Ltd. said that the enterprise has signed a contract with a partner until September 2022, so it cannot increase the price to compensate for rising gasoline prices. Gasoline price fluctuations have also been included in the price fluctuation range in the contract, along with the cost of labor and raw materials. However, up to now, the increased margin of gasoline price has been outside the enterprise's calculations, so there is a risk of losses or breaking even when fulfilling signed orders.

In addition, industrial enterprises that carry out import and export orders are also concerned about the increase in related service costs due to the impact of the increase in gasoline prices in the international market.

As of the morning of February 28, the price of Brent and WTI crude oil both increased by more than 8%, reaching a peak of more than US$105 /barrel, the highest increase since mid-2014.

According to the calculations of businesses, the price of transportation and logistics services can establish a new price level in March or April. Currently, the logistics price for shipping to the US is US$20,000/container; Europe fluctuates in the range of US$17,000-18,000/container.

Cash flow adjustment

Despite being concerned about the impact of gasoline prices on business activities, heavy industry enterprises still have many optimistic signals to reduce the impact of transportation prices.

For example, for enterprises in the steel industry, consumption is expected to be positive when the economy recovers, thereby reducing the burden from fuel costs.

According to experts of VnDirect Securities Company, public spending on infrastructure development will be accelerated in the future and the warming of the residential real estate market will help Vietnam’s construction steel consumption volume.

The South will increase by 10-15% over the same period last year in 2022. Along with that, from the beginning of February 2022, many steel enterprises have announced price increases with an increase of VND200,000-300,000/ton compared to the same period last year. The recent move to increase steel prices of enterprises is also due to the sharp increase in world steel prices from the beginning of 2022, as well as a sharp increase in consumption demand.

In addition, businesses also said that they must actively regulate cash flow and stockpile goods to withstand fluctuations, not only in gasoline prices but also in many other commodities. A representative of Vietnam Chemical Group (Vinachem) said that the company had to make reasonable plans and calculations to be proactive with price fluctuations.

According to experts, in the short term, at least until March 2022, gasoline prices will continue to increase slightly and stay high, especially when the conflict between Russia and Ukraine shows no signs of being resolved soon.

On February 22, Prime Minister Pham Minh Chinh sent a message about ensuring the supply of petroleum for the domestic market. According to the message, petroleum is a strategic, important and sensitive commodity that easily affects people's psychology and has a direct impact on macroeconomic stability; therefore, it must be managed and operated in a scientific and strict manner in accordance with the provisions of law.

The Prime Minister requested the Ministry of Finance to assume and coordinate with the Ministry of Industry and Trade and relevant agencies to urgently study and propose a plan to adjust the tax policy on environmental protection for petroleum products.