US government slaps hefty antidumping duties on Sasol

• 414% penalty for dumping in effect keeps acetone exports out of market

The US government has imposed antidumping duties on acetone from SA, adding to the already extensive woes of oil and chemicals group Sasol.

After an investigation into dumping, the US imposed a 414% duty on SA’s acetone exports. Acetone is used as a solvent in the manufacturing of plastics and synthetic fibres. It thins polyester resin and is an ingredient in cleaning tools, paints and varnishes.

Sasol will bear the burden of the decision as it is the only SA manufacturer of acetone, which is produced as part of the value chain from its synthetic fuels production at its Secunda plant.

The antidumping move against the oil and chemicals group is just another thing that has gone wrong for Sasol, as it is dwarfed by its other problems. More prominently, the effect of Covid-19 and a stand-off between Saudi Arabia and Russia has sent oil and chemicals prices crashing and has wiped R25bn off Sasol’s market value in the past 10 days.

The hefty US duty was imposed on February 6 and was ratcheted up from a provisional duty of 45.85% after Sasol withdrew its defence, in which it argued that its acetone is not comparable with that produced in the US as it does not contain benzene. The duty will remain in force until February 2025 and this, paired with its magnitude, means the US acetone market is closed indefinitely to Sasol, said spokesperson Alex Anderson.

However, the decision will have no operational or financial effect on the business, he said.

“Sasol has a diverse international portfolio of customers and while it is unfortunate for the company to lose our position in the US, there are other regions and customers who are receptive to buying more volumes from Sasol.”

But according to Donald MacKay, a director of XA International Trade Advisers, the effects are already being felt. Export volumes of acetone from

SA to the US have been dropping since the case was initiated and their value has fallen from R237m in 2017 to R110m in 2019. The US antidumping move was

FLEETWOOD GROBLER logical, he said, given the retrospective nature of US trade law, which allows it to levy penalties on imports after the fact.

Meanwhile, volumes from

SA to Belgium and Singapore have increased, and SA is now the largest source of acetone to the latter, though at a much reduced price.

Sasol has managed to maintain a total export volume of 75,000 tonnes per annum from 2017 to 2019. However, in 2017 it was being paid R738m for 75,000 tonnes and in 2019 it received R438m for the same volume, MacKay said. The R300m difference is not insignificant considering Sasol’s earnings for 2019 were R6bn.

Anderson, however, said that acetone is a commodity chemical and prices therefore change all the time.

“The price is also impacted by several other price factors, such as that of propylene, crude oil, etc, not to mention demand and supply,” he said.

MacKay said: “The low price to Belgium and Singapore very likely means this is being dumped, raising the possibility of further actions against SA.” Sasol’s acetone exports from SA are also subject to antidumping duties in India, which were originally implemented in 2008.