Synfuels sales forecast lowered
Chemical conglomerate Sasol has revised its synfuel sales forecast for the year to June down to 60-million barrels from 61-million barrels in financial 2016, in a ninemonth update to the end of March.
Chemical conglomerate Sasol has revised its synfuel sales forecast for the year to June down to 60-million barrels from 61-million barrels in financial 2016, in a nine-month update to the end of March.
The group says a strike at its Secunda colliery towards the end of calendar 2016 has not contributed much to a 4.5% drop in “white product” — petrol, diesel and paraffin — sales to 42.5-million barrels in the period. Rather, this was due to the refurbishment of the Natref refinery in Sasolburg, where crude oil processing fell 2%.
“Sasol put out an operational update that was a bit weaker for the energy business, but more than offset by better chemicals business volume performance,” Kagiso Asset Management head of research Abdul Davids said on Tuesday. Liquid fuels volumes fell 4% in the nine months, mainly on lower market demand and Natref shutdowns.
The group’s “black product”, or bitumen sales, for the period was level at 1.8-million barrels. Meanwhile, Secunda coal mine’s saleable production fell 11.7% to 26.3-million tonnes, compared with that of the matching nine months of financial 2016.
The decrease in coal production up to the third quarter of the 2017 financial year was primarily due to the effect of industrial action at its Secunda mining operations in the first half of the financial year, Sasol said. The group experienced an improvement in production after the strike, it said.
“We are continuing to focus our efforts on restoring coal stockpile levels through our own production, increased external purchases and improving labour productivity to ensure continuous supply to Secunda Synfuels Operations,” it said.
Mish-al Emeran, an equity analyst at Electus Fund Managers, said on Tuesday that, overall, Sasol’s update was good, and that the company’s production performance was “reasonable” — against expectations.
Slightly softer performance of the fuels division was offset by a recovery in the chemicals business on improved pricing and feedstock costs, he said.
During financial 2017, Sasol had entered into various hedging arrangements to mitigate financial risk — in particular against the downside in the crude oil price and also the rand strengthening against major currencies. This was to raise the stability and predictability of the group’s cash flows, said Sasol.