28/08/2012 (Bernama) - OSK Research is expecting Sabah-based refiners to team-up to create an oligopolistic situation in the refinery space to lower the domestic price of crude palm oil (CPO).

It said the government was not introducing measures to lower domestic CPO prices as it would hurt upstream players.

"Without government help, Sabah-based refiners are ganging up to create a measure to lower domestic cpo prices.

"If refiners are successful in introducing a wider discount in Sabah, we do not dismiss the possibility of them attempting to do the same in West Malaysia, although it will be more difficult to do so with the excess capacity and higher number of smaller refiners," it said in a research note.

OSK Research said Malaysian refiners' margin has been squeezed since late last year when Indonesia introduced a new export tax structure which resulted in its ability to price refined products cheaper in the international market.