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Sasol drops fuel hedge

Jun 24 2010 10:18 Sikonathi Mantshantsha

Company Data

Sasol Ltd [JSE : SOL]

Last traded R353.58
Change R-2.42
% Change -0.68%
Cumulative volume 999,481
Market cap R227.90bn

Last Updated: 25/05/2012 at 19:32. Prices are delayed by 15 minutes. Source: McGregor BFA

 

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Johannesburg - Fuel producer Sasol [JSE:SOL] said on Thursday it expects the international crude oil price to bottom out at $70/barrel from the current $76, and is so confident of this prediction it has not hedged any of its fuel production.

"We believe that a crude price sustainably below $70/barrel is fundamentally undervalued and expect that Opec [the Organisation for Petroleum Exporting Countries] may further cut production at levels below this price floor," Sasol said in its third-quarter trading update.

The company said future prices should rise to between $75 and $85/barrel on Opec's continued restraint in production and improving global economic fundamentals. "The greatest risk to our oil price forecast remains a protracted global recession," Sasol said.

However, while the company has not hedged any of its oil production, it changed its dividend policy to reflect growing confidence of better shareholder returns.

Domestically, Sasol said fuel prices increased 3% during its third quarter, compared to the first half of the year, supported by the average income of $77/barrel and an exchange rate of  R7.50/$.

Chemical product margins also improved significantly with international polymer and solvent commodity prices increasing between 12% and 14%, respectively.

Sasol also approved the construction of a R1.9bn ethylene purification unit for its polymers plant in Sasolburg. The plant is expected to be commissioned in the second half of 2013.

In a separate announcement, Sasol announced that its CEO Pat Davies will stay on in this position for another year while the search for his successor continues. Davies was due to retire in 2011.

  - Fin24.com

 

 
 
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