- Asian polymer prices steady: Asian polymer prices, reported this morning, are still holding up reasonably well as LDPE prices declined by 2.2% to $880/t, LLDPE prices declined by 1.8% to $785/t and polypropylene declined by 2.8% to $870/t.
- US prices also steady: US polyethylene prices were all unchanged from last week, HDPE at $710/t, LDPE at $950/t and LLDPE at $730/t.
- Monomer prices continue to crash: US spot ethylene prices slid by 9.5% to $209/t while Asian prices declined by 8.4% to $545/t. Asian propylene prices were 5.1% lower, impacted by weak gasoline prices.
- Ethane prices remain low: US ethane prices continue to trade at 9.5cpg. Margins for cracking ethane continue to decline, however.
- Integrated polymer margins rising: The US integrated polymer margin continues to rise as polymer prices hold steady, and we estimate the integrated margin increased by around 3.6% from last week.
- MEG continues to be weak: MEG prices continue to track lower in line with ethylene and MEG prices declined by 8% in Asia. Margins remain weak but steady.
- LCCP margins lower: Sasol should be long of around 56% of the LCCP cracker’s ethylene at this point as only the LLDPE and MEG plants are consuming ethylene with the balance being sold. Overall, we estimate that margins are declining at the LCCP.
- Sasol’s bond yields still rising: Sasol’s US bond yields continue to rise, and the 4.5% November 2022 bond is trading at a yield of 22.16%. We note that Sasol’s 1-year credit default swap is at 1692bp.
- Liquidity under pressure: Sasol reported available liquidity of around R43.4bn but we do not believe the commercial paper facilities (R5.8bn) are available at this point. The inventory build (crude and final product) expected during the South African lockdown will impact liquidity as well as the company’s efforts to conserve cash.
- Share price: We expect share price volatility compounded by volatility in oil prices as well as the overall market. We remain on a neutral.
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