MOSCOW (MRC) -- Following Sasol’s (Johannesburg) announcement on 17 March of steps it is taking to overcome its financial problems, the company has informed the Johannesburg stock exchange that it is taking further actions in response to the fast-developing coronavirus disease 2019 (COVID-19) pandemic, reported Chemweek.
The company said that “a small number of Sasol employees have tested positive for COVID-19 and are receiving full support.”
It says that substantial progress has been made with regard to its USD2-billion cash conservation program and it plans to implement additional self-help management actions to mitigate further negative impacts of COVID-19 across its portfolio. In South Africa, the national COVID-19 lockdown has resulted in an unprecedented decline in fuel demand since coming into effect on 27 March 2020. Sasol and its partner Total South Africa have decided to suspend production at their Natref refinery at Sasolburg with effect from 9 April 2020 until further notice.
Given the steep decline in fuels demand, Sasol has also decided to reduce daily production rates at its Secunda Synfuels Operations (SSO) by approximately 25% to meet the current market demand, while maintaining optimal inventory levels, until further notice. A further reduction in production rates may be required depending on developments in the fuels market, the company says. All Sasol's coal mines are continuing to operate despite lower internal demand, resulting in external coal purchases being significantly minimized.
Sasol says it will continue to prioritize chemicals production within the revised SSO operating parameters including the latest cutback scenario. Despite the suspension of production at the Natref refinery and lower production rates at SSO, the country's current demand for fuels and chemicals, including sanitizers, will be met. The company says it will continue to monitor chemicals demand as well as supply chain risks.
Given these developments and the decline in demand, liquid fuels sales volumes are expected to be approximately 50–51 million barrels (MMbbl) against the previously guided 57–58 MMbbl for financial year 2020. Accordingly, synfuels production volumes will be approximately 7.3–7.4 million metric tons (MMt) against the previously guided range of 7.7–7.8 MMt. Sasol says that at this stage a similar reduction in synfuels chemicals demand is not being experienced, and the company is prioritizing supply of chemicals within South Africa as well as strong export demand.
Sasol has made significant progress on the $2-billion business self-help measures for financial years 2020 and 2021, which form the basis of the response strategy to the COVID-19 pandemic and oil price volatility. Given the continued negative impact of COVID-19 on market demand and global macroeconomic indicators, Sasol's management team is in the process of proactively identifying further measures to provide an additional buffer against short-term volatility.
As MRC wrote previously, in mid December 2019, Sasol announced that the LCCP Ethane Cracker was increasing production rates following the successful replacement of the acetylene reactor catalyst. Sasol’s Ethane Cracker with a nameplate capacity of 1.54 million tons per year achieved beneficial operation in August 2019 but has run approximately 50-60% of nameplate capacity due to underperformance of the plant’s acetylene removal system. The company stated that the issue had been resolved then.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
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