• Asian polymer prices lower:   Asian polymer prices, reported this morning, moved sharply lower and only PVC prices did not decline.  LDPE prices were 5% lower at $840/t while LLDPE prices declined 13% to $680/t.  Polypropylene prices were 8% lower at $800/t
  • US prices also lower:  With the exception of LDPE which was flat ($950/t), US polyethylene prices were sharply lower from last week, HDPE fell 13% to $620/t, and LLDPE fell 8% to $670/t.
  • Monomer prices continue to crash:  US spot ethylene prices slid by 18% to $176/t while Asian prices declined by 17% to $455/t.  Asian propylene prices were 15% lower at $555/t, impacted by weak gasoline prices. 
  • Ethane prices remain low:  US ethane prices were slightly higher at 9.9cpg.  Margins for cracking ethane continue to decline rapidly and were 29% lower than the previous week.
  • MEG slightly higher:  MEG remain weak but in Asia the price increased slightly (1.2%) to $390/t.
  • LCCP margins still falling:  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 would expect margins at the LCCP continue to decline.

Other news impacting Sasol:

  • Sasol’s bond yields rising rapidly:  There were some recovery in Sasol’s bonds this week and after peaking at 48% last week, the 2022 4.5% bond had yields drop down to 33%.  The CDS also peak at 3 281 bp last week currently trading at 3060bp.
  • South African refineries: The SAPREF refinery in Durban will minimise maintenance to critical activities to reduce the spread of the Corona virus.  The intention is to continue supply of fuels to the South African market (link).  The Engen refinery, also in Durban, has however undergone a temporary shutdown in anticipation of lower demand (link).
  • South African traffic volumes lower:  A study has shown that South Africa’s vehicle activity has declined significantly since the implementation of the lockdown.  Passenger activity is down by more than 70% while commercial activity is down by around 60%.  Taxi and bus activity is down by just under 70%.  Largest reductions were in Gauteng and the Western Cape followed by the Free State.  Traffic is down most in the affluent suburbs in the country (link).
  • Share price: We expect share price volatility compounded by volatility in oil prices as well as the overall market.  We remain on a neutral