• A weaker oil price, significantly lower refining margins and a stronger rand have driven spot earnings lower and FY20 spot HEPS at R12.51 are now 20% below our forecast and the spot estimate of R15.43 for FY21 is almost 60% below our estimate of R36.30.
  • We estimate if spot prices remained, the net debt: EBITDA ratio would end FY20 at 3.45x and FY21 at 3.41x. Gearing would be 66.9% and 64.4% respectively. Moody’s downgraded Sasol’s credit rating yesterday (link).

Global Chemical News

  • The ACC reports that global chemical production declined by 1% in January mainly due to a 2.1% decline in China.  While the plastic segment increased 0.5%, chemicals into the agricultural and consumer sectors declined by 2.9% and 4.6% respectively (link).
  • ICIS reports that plastic processors in China are ramping up production as logistics constraints are being lifted.  Plastic inventories remain high however and it could take up to two months for inventories to return to normal levels (link).