• Sasol’s FY21 spot HEPS ‘increases’ to a loss of R1.91 this week as oil prices, refining margins and chemical prices increased.  The gains from these increases are partly offset by a stronger rand and higher ethane prices.
  • Ethylene prices continue to rise but polymer prices have increased at a much slower rate which has seen downstream margins for polyethylene production under pressure in Asia.
  • We show our expectations for Sasol’s net debt and net debt: EBITDA ratio at June 2021 below if spot prices prevailed until then.

Global chemical news

  • The increase in ethylene prices is ascribed to limited arbitrage flows from US and Europe following the restart of plants in China.  Prices should weaken as trade flows return to normal (link).
  • Omani energy firm, OQ has started test runs at a new 880kt polyethylene plant in an already oversupplied market (link).