Sasol management expects that pricing and demand will remain volatile for its energy and chemical products through the rest of its year to June 30, 2024.
Global market sentiment and petrochemical markets were uncertain, with the margin outlook for chemicals more muted than previously expected, the group said in a production and sales report released yesterday about its operations for the first quarter to September 30.
Previous 2024 full-year production and sales volume guidance, however, remained intact for all regions.
Sasol’s directors said the first quarter performance was impacted by global economic volatility, with volatile oil and petrochemical prices, unstable product demand and inflation pressures.
In South Africa, the under-performance of state-owned enterprises continued to impact sales volumes, margins and resultant profitability.
In the energy businesses, there had been a first-quarter increase in production and productivity following operational mitigation plans.
There were higher production volumes at SO, mainly due to a phase shutdown versus a total shutdown the prior year.
Liquid fuel sales in the quarter were higher than prior year’s quarter, from improved production and demand.
Natref delivered a first-quarter production run rate that was 7% higher. However, the crude rate was lower than expected due to illegal tapping on the crude oil pipeline.
“In the past quarter, we experienced eight outages, and we are working with Transnet to manage the issue proactively.”
The chemicals business faced a tough market environment, with the average sales basket price 31% lower than in the first quarter of 2022 and 9% lower than the final quarter of 2023, with the declines driven by lower oil, feedstock and energy prices, and weak demand.
Margins were under pressure. Production rates at several units were being managed in response to the lower demand and to manage inventory levels, while cost and capital management measures continued.
First-quarter chemicals sales volumes were 5% higher than the first quarter of the 2023 financial year, largely due to higher ethylene and polyethylene sales in the US, improved production and supply-chain performance in Africa, offset by continued lower demand in Eurasia.
A healthy coal stockpile had been built in the quarter to ensure a stable supply of feedstock to SO.
There had been an “incremental improvement in productivity rates in mining”. Investigations were under way on two work-related fatalities.
Gas production in Mozambique was 11% higher as a result of increased gas availability from additional wells.
ORYX GTL had stable operation, achieving a 96% utilisation rate.
Chemicals Africa sales volumes were expected to be 0 – 5% higher than in the 2023 year and higher sales volumes would be dependent on improvement in production and supply chain performance in South Africa, especially Transnet.
Chemicals America sales revenue from the American assets was 28% lower, driven by lower prices and offset by higher volumes.
The average sales basket price was 38% lower than the same period a year before and 15% lower than the fourth quarter of 2023, due to lower oil, feedstock and energy prices, changes in product mix and continued weak demand.
On Friday, Sasol and the Council for Geoscience (CGS) signed a Memorandum of Understanding to collaborate and develop carbon capture and utilisation and storage (CCUS) potential in South Africa. The collaboration marked another step in accelerating Sasol’s trajectory towards achieving a low-carbon economy through strategic and co-operative initiatives.
BUSINESS REPORT