• FY21E Spot earnings increased by 22% to R7.39/share this week as oil prices increased by 8.7% and refining margins by 7.9%.  At spot prices our estimate of net debt declined to R111bn assisted by the stronger rand.  Excluding lease liabilities and long-term financial liabilities net debt comes to R89bn and net debt: EBITDA would end FY21 at 2.6x
  • Chemical prices in Asia increased across the board with ethylene prices up by 10%.  Polymer prices were also higher.  US polyethylene prices were however flat to lower.  We highlight a significant increase in palm kernel oil prices (+35%) in the last month, which should also support Sasol’s alcohol prices.

Global chemical news

  • The Canadian federal government announced in October plans to ban six very commonly used single-use plastic items by the end of 2021. This ban would impact polyethylene, polypropylene (link).
  • Asian polypropylene prices are at a 13 to18-month high due to tight supply, shipment delays and falling inventories.  Some traders believe a shortage in containers could last until February (link).