Sasol Share Price Soars on Fuel Sales Revision for FY26 – A JSE: SOL Breakout Soon?
Sasol’s share price is rebounding sharply after a sudden selloff, as improving operational performance and a stronger fuel sales outlook...
Quick overview
- Sasol's share price has rebounded sharply after a significant selloff, driven by improved operational performance and a positive fuel sales outlook.
- The stock experienced a dramatic 23% drop before recovering approximately 14% in a single session, highlighting the volatility in energy-linked equities.
- Operational updates revealed key milestones and a revision in fuel sales expectations, contributing to renewed investor confidence.
- Despite a downgrade from JPMorgan and concerns over oil prices, Sasol's balance sheet improvements and operational gains suggest a resilient recovery narrative.
Sasol’s share price is rebounding sharply after a sudden selloff, as improving operational performance and a stronger fuel sales outlook help restore confidence in the longer-term recovery story.
A Violent Pullback Followed by a Swift Rebound
Sasol Limited (JSE: SOL) has experienced a dramatic swing in investor sentiment over the past two weeks. After enjoying a multi-month recovery, the stock came under intense pressure late last week, plunging roughly 23% in just a few sessions and erasing a sizable portion of its year-to-date gains.
The selloff briefly dragged Sasol shares below the psychologically important R100 level, with the price touching R94 early on Tuesday. However, that weakness proved short-lived. This week has seen a forceful rebound, with the share price climbing about 14% in a single session and retracing much of last week’s losses.
The sharp reversal highlights how quickly sentiment can shift in energy-linked equities when macro forces collide with company-specific developments.
Operational Update Helps Restore Confidence
The tone shifted this week after Sasol released its business performance metrics for the six months ended 31 December 2025. The update highlighted a series of operational milestones that helped refocus investor attention on fundamentals rather than macro volatility.
Notably, the destoning plant reached beneficial operation in December, with sink performance tracking the lower end of the targeted 12%–14% range. Secunda Operations delivered higher output, while Natref production improved with support from Prax SA capacity utilization. Although the LIP JV cracker experienced an extended outage, it was successfully restarted by the end of December.
Guidance Revisions Offer a Mixed but Improving Picture
Sasol also revised key outlook assumptions. Fuel sales expectations were lifted to growth of between 5% and 10% versus FY25, a notable improvement that supported the share price rebound. Gas production guidance was trimmed to a range of flat to down 5% year-on-year, reflecting a more cautious stance.
On the sustainability front, Natref commissioned a third low-carbon boiler, while Sasol secured an electricity trading license in November 2025—both seen as incremental steps toward operational resilience. Importantly, the company also reported a fatality-free second quarter of FY26, reinforcing its safety performance.
JPMorgan Downgrade Triggers a Sentiment Shock
The immediate catalyst for the selloff was JPMorgan’s downgrade of Sasol to Underweight from Neutral. The bank cut its price target to R94 from R107, arguing that the risk-reward balance had deteriorated following the stock’s powerful rally earlier in the year.
JPMorgan’s concerns centered on two key factors. First, the bank warned that oil prices could struggle to sustain recent gains once geopolitical tensions fade. Second, it flagged the strengthening South African rand as a growing earnings headwind, given Sasol’s substantial exposure to U.S. dollar–denominated revenues.
With the stock already significantly re-rated since April, the downgrade prompted aggressive profit-taking.
Oil Prices Lose Their Geopolitical Premium
Sasol’s pullback was amplified by a rapid reversal in oil markets. The previous week had seen crude prices surge on fears of escalating tensions in the Middle East, including speculation around possible U.S. military involvement in Iran. That geopolitical premium, however, evaporated quickly.
Comments from U.S. President Donald Trump suggesting a more restrained approach toward Iran were interpreted as de-escalatory. As a result, oil prices retreated, with WTI falling back below the $50 level. Energy stocks globally came under pressure, and Sasol—having benefited from the prior oil rally—was caught on the wrong side of the reversal.
A Recovery That Had Already Run Hard
The recent volatility comes after an exceptional recovery earlier in 2025. From April, Sasol shares surged from around R55 to nearly R127 by early September, delivering gains of more than 120% and ranking among the strongest performers on the JSE.
That rally was driven by firmer energy prices, operational stabilization, and growing confidence in balance-sheet repair. However, the stock struggled to sustain momentum above the R130 level, which emerged as a key technical and psychological barrier.
The past two weeks now look more like a correction within a broader recovery than a wholesale breakdown in the investment case.
Technical Levels Come Back Into Focus
From a technical standpoint, Sasol’s chart suggests a critical testing phase. In August, the stock successfully reclaimed its 50-week simple moving average (yellow), reigniting buying interest and confirming a medium-term trend shift. That level, currently around R100, has since acted as a key support zone and it held again this week despite the temporary piercing below it.
SOLJ Chart Weekly – Buyers Trying to Push Above the 100 SMA
However, rallies have repeatedly stalled near the 100-week moving average (green), which rejected the bounces higher. Now buyers are trying to push the share price above it again, so let’s see if they succeed. On the daily chart the 200 SMA (purple) has turned into a support indicator, which rejected the selling price again this week.
SOLJ Chart Weekly – The 200 SMA Held As Support
Operational Momentum Remains Encouraging
Away from share price volatility, Sasol’s operational performance continues to show improvement. The company’s Q1 FY26 update highlighted gains across several core segments:
- Mining: Saleable production rose 18% quarter-on-quarter, supported by better destoning plant performance.
- Secunda Operations: Volumes increased 4% QoQ and 9% year-on-year, reflecting improved plant reliability.
- International Chemicals: Revenue growth was achieved despite weaker U.S. chemical pricing.
- Fuel Sales: Volumes exceeded last year’s levels, benefiting from stronger mobility demand.
These developments translated into higher revenue and adjusted EBITDA compared with the same period last year, reinforcing confidence in operational execution.
Balance Sheet Progress Provides a Cushion
Sasol’s FY2025 results highlighted meaningful balance-sheet improvement. Headline earnings nearly doubled year-on-year, free cash flow strengthened, and net debt declined by 13%. Liquidity was further boosted by a R4.3 billion settlement from Transnet.
While revenue and EBITDA moderated as energy markets normalized, the overall trajectory reflects greater financial discipline. This progress provides a buffer against periods of oil price weakness and supports the longer-term recovery narrative.
Outlook: Volatile, but Not Broken
Sasol’s recent price action underscores the sensitivity of energy stocks to macro shifts, currency moves, and geopolitical headlines. While near-term volatility is likely to persist, improving operations, a stronger fuel sales outlook, and balance-sheet repair suggest the recovery story is still intact—provided key support levels continue to hold.
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