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#41 Spell Jammer

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Posted 28 April 2020 - 02:19 PM

A lot of people must have thought with a 30+% drop in the Oil price over the weekend, Sasol would be a sure thing to short this morning. An boy are they getting it wrong!....Bear trap indeed!

 

I am not convinced that this is the turning point yet....short term indicators have not broken their trend; in fact they have broken out to the top end and could spark a stronger rally. Especially when short positions need to close out tomorrow of the day after......

Where do you see this rallying to?


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#42 Pilotpilot

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Posted 28 April 2020 - 02:13 PM

I give up trying to predict the movement on this share. These movements arent based on any logical reasoning, let alone company fundamentals. One would think that this is all highly negative news for Sasol. Mr market has other ideas. Could it be the bear trap you've warned about?

 

A lot of people must have thought with a 30+% drop in the Oil price over the weekend, Sasol would be a sure thing to short this morning. An boy are they getting it wrong!....Bear trap indeed!

 

I am not convinced that this is the turning point yet....short term indicators have not broken their trend; in fact they have broken out to the top end and could spark a stronger rally. Especially when short positions need to close out tomorrow of the day after......


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#43 Spell Jammer

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Posted 28 April 2020 - 01:29 PM

Just pure craziness and confusion......the WTI Oil price goes down by 31% ($16-58 to $11-41) since the closing of trade on Friday. Plus the Rand strengthens..........and what happens to Sasol........ it's up by 14% and climbing.

 

Oohhhh....these markets.......gotta love it.........all common sense goes out the window....... :D

 

I will update this afternoon and see what my program advises......because my advice would be wrong!!.... :D  :D

 

I give up trying to predict the movement on this share. These movements arent based on any logical reasoning, let alone company fundamentals. One would think that this is all highly negative news for Sasol. Mr market has other ideas. Could it be the bear trap you've warned about?


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#44 Pilotpilot

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Posted 28 April 2020 - 01:24 PM

Closing in your R75/R78 range Pilot. Going to be interesting to see how this plays out.

 

Just pure craziness and confusion......the WTI Oil price goes down by 31% ($16-58 to $11-41) since the closing of trade on Friday. Plus the Rand strengthens..........and what happens to Sasol........ it's up by 14% and climbing.

 

Oohhhh....these markets.......gotta love it.........all common sense goes out the window....... :D

 

I will update this afternoon and see what my program advises......because my advice would be wrong!!.... :D  :D


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#45 Spell Jammer

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Posted 28 April 2020 - 12:39 PM

 

 

But the scenario will probably play out, that the Bull will probably get the first shot. Maybe a breakout to the top, with a quick spike to R75/R78, and then the Bear will be hitting hard. The market always tries to confuse everyone, and this will be no different. It is the big traders battle, that could make or break them.

 

Closing in your R75/R78 range Pilot. Going to be interesting to see how this plays out.


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#46 Pilotpilot

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Posted 24 April 2020 - 09:26 AM

Target price for SOL R63-83, so not much future value to invest here.

 

It is trading very close to a sellers resistance level @R65-00, and there is a buyers support level at around R56-00. These levels are getting closer to each other each day and whichever breaks....it will be a crazy move in that direction, because it has a very wide trading range.

 

Pure gambling at this stage....but if I had to put my money on the Bull or the Bear.......I have to go with the Bear.

 

But the scenario will probably play out, that the Bull will probably get the first shot. Maybe a breakout to the top, with a quick spike to R75/R78, and then the Bear will be hitting hard. The market always tries to confuse everyone, and this will be no different. It is the big traders battle, that could make or break them.

 

I will not partake in this battle, but I might be waiting at the R75 to R78 mark, after round one, and put some money on the Bear to win!

 

Good luck to everyone....this is going to be fun to watch over the next 2-4 weeks.

And Boom!!.....a breakout above R65-00 with yesterdays' close. Bulls getting the first shot in.


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#47 Pilotpilot

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Posted 23 April 2020 - 01:09 PM

Target price for SOL R63-83, so not much future value to invest here.

 

It is trading very close to a sellers resistance level @R65-00, and there is a buyers support level at around R56-00. These levels are getting closer to each other each day and whichever breaks....it will be a crazy move in that direction, because it has a very wide trading range.

 

Pure gambling at this stage....but if I had to put my money on the Bull or the Bear.......I have to go with the Bear.

 

But the scenario will probably play out, that the Bull will probably get the first shot. Maybe a breakout to the top, with a quick spike to R75/R78, and then the Bear will be hitting hard. The market always tries to confuse everyone, and this will be no different. It is the big traders battle, that could make or break them.

 

I will not partake in this battle, but I might be waiting at the R75 to R78 mark, after round one, and put some money on the Bear to win!

 

Good luck to everyone....this is going to be fun to watch over the next 2-4 weeks.


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#48 soutie

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Posted 23 April 2020 - 01:01 PM

Afternoon Spell Jammer....

The way I read today's announcement is management are doing both what the company needs & also being honest with what the market & fund managers are looking for. This Covid situation is an opportunity to apportion blame whilst Sasol needs not own it's own very large mistakes.

Cost cutting all over the place salary reductions & a wage freeze are all part of the overall mix....Now the hedge is in place for 6mths @$32 nicely done....!

I feel the Lake Charles fiasco will eventually be the game changer it was intended...Granted I have no idea or timing....Sasol will then de-couple from the oil price & will become a global chemicals producer with some domestic oil interests.

The debt is a MASSIVE problem that won't go away with a couple of disposals....That also will take time ...& again I've no idea how long.

The current situation is a good smoke screen to cover (not hide) the dismal state David Constable left Sasol in...

As you already know I'm in & in for the long ride...But agree with you not trading this 1 only in my long term portfolio.

Cheers.


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Anyone need a heads up...!


#49 Spell Jammer

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Posted 23 April 2020 - 10:00 AM

Good luck selling Lake Charles stake at a reasonable price and in light of it not generating revenue. That's excluding the horrendous economic climate. The Sasol share price movement at the moment defies belief. 

 


Sasol now expects a loss from Lake Charles in 2020

Embattled chemicals group Sasol now expects its Lake Charles project in the US to make a loss in 2020 due to the recent oil price rout.

 

The project is expected to weigh on earnings before interest, taxes, depreciation and amortisation (ebitda) by $50m (R950m)-$100m in its year to end-June.

Sasol had previously given guidance of positive ebitda of $50m-$100m.

Oil prices have plummeted in 2020 due to a combination of a price war between Russian and Saudi Arabia and plummeting demand due to the Covid-19 outbreak.

Sasol’s share price has lost more than 80% in 2020, with cost overruns at its Lake Charles project and an explosion at that facility earlier in the year also putting pressure on the group.

To pay down debt, the group is looking to generate cash of $6bn through cost-cutting measures, asset disposals and a possible rights issue.

Sasol said on Thursday it was cutting management salaries, with directors’ fees being reduced by between 20% and 40% and the salaries of middle to junior management being cut by between 10% and 15%.

Salary sacrifices are planned for eight months, though this would be assessed against the group’s savings targets.


Edited by Spell Jammer, 23 April 2020 - 10:04 AM.

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#50 Spell Jammer

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Posted 21 April 2020 - 08:23 PM

Damn I think there is big trouble coming. Sold out all my positions at a loss :/ Too much risk involved here at the moment. WTI futures going into negative is no good, the brent crude price might even go to 10 dollars soon. All economies are basically shut with no air travel etc. Supply has stayed the same however usage of oil worldwide dropped to all time lows. I cannot see this one turning around before end of q2


Brent crude touched $20 dollars tonight and is hovering at $21. SOL trying to sell a stake in Lake Charles during this horrific economic market explains the desperation to reduce debt.
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#51 andi222

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Posted 21 April 2020 - 11:25 AM

Damn I think there is big trouble coming. Sold out all my positions at a loss :/ Too much risk involved here at the moment. WTI futures going into negative is no good, the brent crude price might even go to 10 dollars soon. All economies are basically shut with no air travel etc. Supply has stayed the same however usage of oil worldwide dropped to all time lows. I cannot see this one turning around before end of q2


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#52 Spell Jammer

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Posted 21 April 2020 - 05:50 AM

Not all governments. European countries are lifting some restrictions and a lot more countries are going to do the same in the next few weeks as their economies just cannot handle the economic impact of a lengthy lockdown.


That may be true but social distancing will still restrict travel and I wager that at least 10-20% of the global workforce will continue to leave some elements of remote working in place. This will continue to impact demand. It will definately increase, but I doubt that things will go back to the way they were pre lockdown.
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#53 Shi

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Posted 20 April 2020 - 11:40 PM

Industrial and economic activity is grinding to a halt as governments around the globe extend shutdowns

 

Not all governments. European countries are lifting some restrictions and a lot more countries are going to do the same in the next few weeks as their economies just cannot handle the economic impact of a lengthy lockdown.


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#54 Tom

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Posted 20 April 2020 - 11:03 PM

Industrial and economic activity is grinding to a halt as governments around the globe extend shutdowns


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#55 Tom

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Posted 20 April 2020 - 11:00 PM

minus $37.63 a barrel. Sellers were actually paying buyers to take the stuff off their hands. there is so much unused oil sloshing around


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#56 Spell Jammer

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Posted 20 April 2020 - 08:49 PM

American oil crashes below 0dollars/barrel, at 1 point it was negative.... Yooohh hectic times ahead

Yep simply no demand or enough space to store it all. Oil producers are having to pay to get rid of the excess supply. The OPEC cuts are now where near sufficient to stem the supply.

What a time to be alive. Goodness me..
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#57 Lionelza1

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Posted 20 April 2020 - 08:25 PM

American oil crashes below 0dollars/barrel, at 1 point it was negative.... Yooohh hectic times ahead
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#58 Spell Jammer

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Posted 20 April 2020 - 08:12 PM

$10 dollar WTI oil is officially here while Brent crude is approaching the $25 mark again. Sasol can potentially ride out low prices until the end of June 20 as they have hedged at $32/BBL. If the price continues to collapse beyond this date, a rights issue is inevitable and its potentially RIP Sasol.

 

Interesting day ahead tomorrow.


Edited by Spell Jammer, 20 April 2020 - 08:13 PM.

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#59 Spell Jammer

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Posted 17 April 2020 - 01:02 PM

 

You can't compare ASC's debt levels with that of Sasol. But agreed they need to reduce their debt. 

Agreed, but i am merely highlighting that you are using the same logic that others are applying with ASC in terms of their views around debt and the underlying value they see in the company, and the particular products that each company is pushing under these uncertain times.


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#60 andi222

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Posted 17 April 2020 - 12:47 PM

Don't think that the market has overreacted. Sasol's handling of Lake Charles has been nothing short of diabolical which has both destroyed value and increased debt to unsustainable levels. There lack of a hedging strategy has also put them at the mercy of a weak rand and a $35 dollar oil price. If you think ASC's paltry R3Bil debt is bad, Sasol's is currently sitting at an eye watering R164 Billion rand with no demand, higher debt repayments as a result of credit downgrades and despite Opec artificially increases oil prices. Dont take my word for it. This is what Opec says:

 

"The Organization of the Petroleum Exporting Countries now expects global demand to contract by 6.9 million barrels per day, or 6.9%, in 2020, it said in a monthly report. Last month, OPEC expected a small increase in demand of 60,000 bpd.

 
“Downward risks remain significant, suggesting the possibility of further adjustments, especially in the second quarter,” OPEC said of the demand forecast.
 
“The oil market is currently undergoing historic shock that is abrupt, extreme and at global scale.”"

 

If we look at a U shaped post COVID economic recovery pattern, economists predict that it will take 6-18 months for the economy to recover. With oil prices dropping and a 6-18 month economic recovery path, a Sasol share rights issue is inevitable which will further decrease the share price. You have to be extremely brave with cash to burn to long this one. Fortune favors the brave however..

 

Hi Spell Jammer, thanks for your view. Agreed if a rights issue will happen I'm selling my shares as history has proven that a rights issue is poison for any share price. 

 

However I'm still convinced Sasol can navigate through this storm without a rights issue. I think management will try their best to avoid a rights issue. 

You can't compare ASC's debt levels with that of Sasol. But agreed they need to reduce their debt. 

 

Sasol is expecting that the LCCP project will contribute to a positive EBITDA towards the end of 2020. They have also declared no dividends for Dec 19. 

The new CEO Fleetwood Grobler for me can turn this one around. But let's wait and see. Only time will tell.


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