The US Department of Commerce has imposed a five-year-long 414.92% anti-dumping duty on Sasol for imports of acetone, effectively closing off the US market to the oil and chemicals company.
According to a statement on the US's International Trade Administration's website on 6 February 2019, the US had imposed the anti-dumping penalties against Belgium, South Korea and South Africa. The decision came following an investigation into an alleged dumping complaint lodged in 2018 by the Coalition for Acetone Fair Trade against producers of acetone in these countries as well as Saudi Arabia, Singapore and Spain.
On 5 April 2019, the investigators – the US Department of Commerce (DOC) and the International Trade Commission (ITC) – determined that Sasol's acetone caused injury to the US market. However, Sasol challenged this on the grounds that for a case of dumping to hold, the product should be a like-for-like product. According to Sasol, its imported acetone was not a comparable product in that it did not contain benzene, Sasol said in a statement issued in response to questions from Fin24.
"Sasol's technical report was rejected. In our view the ITC failed to give due and proper regard to the content of Sasol's submission," the group said. The DOC then issued a preliminary duty of 45.85% on 17 September 2019 and Sasol eventually withdrew its defence by the end of September 2019.
Sasol said that the withdrawal of its defence is not an admission of alleged dumping. "In fact, we are of the view that the ruling has been unjust in many respects. Sasol is committed to comply with all laws and regulations in all jurisdictions in which we operate."
The DOC continued its investigation and decided on a final determination of an anti-dumping duty of 414.92%, which is enforceable up until 2025.
"It must be noted that the DOC initially imposed a duty band between 12.83% - 410.22% but due to Sasol's withdrawing its defence, the DOC selected to choose the higher end of the duty band plus a penalty, resulting in the 414%.92%," the group said.
Given the magnitude of the duty and the period for which it applies, Sasol said the US acetone market would be closed to it "indefinitely".
"Sasol will regrettably no longer export acetone to the US," the group said. "While it is unfortunate for the company to lose our position in the US, there are other regions and customers who are receptive to buying more volumes from Sasol," the group added.
It's been a difficult few weeks for Sasol, as it lost nearly 90% of its value over the past year as the oil price crashed, following a price war and reduced demand as travel bans are instituted in an effort to curb the coronavirus outbreak.
The group, however, has released a new plan to raise $6 billion or R100 billion by the end of 2021. This will be done through a rights issue of R33 billion worth of shares, a cash conservation programme aimed to raise $2 billion and an asset disposal to raise another $2 billion.
Sasol said it currently has available liquidity of approximately $2.5 billion, with no significant debt maturing before May 2021.
Sasol's share price, which opened at R33.96 on Friday, was trading 7.95% weaker at R27.80 around 14:30, a stark difference to a year ago, when it was tradign around R450.