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Recently Released Market Study: South Africa Petrochemicals Report Q1 2013

Recently published research from Business Monitor International, "South Africa Petrochemicals Report Q1 2013", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 02/27/2013 -- The latest South Africa petrochemicals report examines how the country's leading producer Sasol has sustained domestic sales in the face of increasing political unrest, a weakening external environment and the domestic economic downturn. It analyses the industry's competitiveness against external competitors and its plans for long-term growth.

While Sasol has succeeded keeping its sales volumes up, overall polymers demand has weakened due to hikes in prices, leading to a slowdown in demand from plastics converters further down the manufacturing chain. PE and PP demand were flat in H212 due to economic slowdown, labour unrest and the resulting decline in investor and consumer confidence. On the upside, the weakness of the rand kept import costs elevated, weighing on demand somewhat. Furthermore, the slowdown in the growth of consumer spending and investment also kept a lid on import growth.

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Over the last quarter, BMI has revised the following forecasts/views:

- Investor confidence has been knocked by the country's debt downgrade and rising labour unrest. Sasol, the country's biggest corporate taxpayer, has warned that the situation is 'not conducive to building investor confidence in the economy'. Another major downside risk for South Africa is a potential break-up of the eurozone.
- Polyolefin producer Safripol declared force majeure on its polymer supplies from early November 2012 due to problems in power supplies at its Sasolburg site, thereby worsening the shortage of HDPE and pushing up prices in Q412.
- Sasol was able to boost sales by focusing on cheaper LDPE grades in 2012, thereby undercutting the price of imports. It is also somewhat insulated from imports due to the costs of shipping, storage and delivery and the risks posed by fluctuations in the value of the rand against the US dollar.
- Instability in feedstock supply is set to be resolved with investment in plant efficiency, including Sasol's EPU5 and C3 stabilisation capital projects are expected to come on stream at end-2013 and end-2014 respectively and should raise ethylene production by around 48,000tpa by 2015.
- In BMI's Middle East and Africa Petrochemicals Risk/Reward Ratings (RRRs) matrix, South Africa comes seventh with 54.6 points, unchanged since the previous quarter. This puts it 2.2 points behind Israel and 5.6 points ahead of Turkey.

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