• Sasol’s spot earnings continue to rise as oil and chemical prices continue to rocket higher.  FY21 spot core HEPS are at R27.46 and FY22 spot HEPS are now at R54.51.  Refining margins are weak however and diesel cracks have fallen to $3/bbl.
  • Asian ethylene prices increased by 20% in the week and US ethylene prices moved 11% higher.  Asian polymer prices also moved higher and US LDPE and LLDPE prices increased by 12% and 19% respectively.  Integrated margins are approaching record levels.  The potential upside to our FY22 earnings forecast due to current high chemical prices alone is 40%.

Global chemical news

  • Shortages of critical components and repair personnel are slowing restarts in the USA and many plants remain offline.  Inventories have been drawn down to unprecedented levels (link).
  • Sasol’s cracker in Louisiana operated through the spell of cold weather and the polyethylene plants have started up successfully.  Sasol should benefit from the current high ethylene and polyethylene prices and margins in the USA.