Sasol Doubling 1-Octene Capacity to 196,000 Tons to Provide 33% of Global Demand

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Current global consumption of 1-Octene is approaching 500,000 tons a year, and demand is expected to grow at a rate of 6% to 8% a year to meet demand from plastics manufacturers.

This is the market background for Sasol's (NYSE:SSL, JSE:SOL) (Johannesburg, South Africa) announcement in the second week of August, that the company will construct a new 1-octene plant to produce 100,000 tons a year, which will effectively double the production to 196,000 tons a year, when it comes on stream at the end of 2006. This will be the third 1-octene plant located at Secunda in South Africa's Mpumalanga province. The three plants are operated by Sasol Olefins and Surfactants and form part of Sasol's chemical's business. First deliveries from the new plant are expected to reach global customers by January 2007.

Although, no official investment cost was announced for the new plant, it is expected that it will cost more than the second plant, which is currently being constructed at a cost of $144 million.

Market observers expect Sasol to ride on a wave in the next twelve months, where high oil prices and high chemical prices present a win-win situation. These trends are in parallel with cost cutting, which will help to turn the negative trading effects of the South African Rand, which is the highest performing currency against the U.S. dollar this year. High oil prices have placed pressure on Sasol's European operations, where plants are downstream from oil feedstocks.

Sasol CEO, Pieter Cox said that the new plant would boost Sasol's output to 33% of total global production, if current demand continues. 1-octene is the hydrocarbon molecule that gives special performance features, such as elasticity, flexibility, impact resistance, and strength to plastic consumer products.

Sasol Olefins and Surfactants is a leading producer of hydrocarbons, such as 1-octene, 1-pentene, and 1-hexene for use as chemical intermediates in the production of plasticizer alcohols, polymers, polyethylene, fatty acids, detergent alcohol, and lubrication oil additives.

Specific characteristics are produced by the combination of these hydrocarbons, giving qualities of strength, thinness, and puncture resistance in a wide range of products, from auto interiors to strong garbage bags.