Sasol Shares: Can Operational Gains Overcome Credit Concerns?

Sasol's stock demonstrated notable upward momentum in recent trading, advancing 1.81 percent to reach 10,965 ZAR. This gain occurred against a backdrop of general market apprehension, with the Fear & Greed Index registering just 39 points. Over the past four weeks, the energy and chemical company's shares have accumulated nearly 3 percent in value.

The South African company has implemented a clear strategic repositioning, prioritizing debt reduction above all else. Management aims to achieve cost savings totaling 10-15 billion ZAR by 2028. Dividend distributions will remain suspended until net debt sustainably falls below $3 billion.

Additional strategic pillars include:
* Increasing Secunda production capacity from 6.7 to over 7.4 million tons by 2028
* Expanding renewable energy capacity to 2 gigawatts by the end of the decade
* Reporting net income of 6.8 billion ZAR for fiscal 2025, a significant improvement from the previous year's 44.3 billion ZAR loss

Following a substantial 39 percent share price appreciation during 2025, investors now question whether operational improvements can sufficiently address rating agency concerns.

Credit Rating Pressures Emerge

Despite operational achievements, S&P Global Ratings adopted a less favorable stance on October 14, 2025, revising Sasol's outlook from "stable" to "negative." The rating agency cited global oversupply conditions and weak demand across oil and chemical markets as factors pressuring margins and utilization rates.

Should investors sell immediately? Or is it worth buying Sasol?

S&P specifically highlighted challenges in Sasol's international chemical operations:
* Demand weakness across European and Asian markets
* Global overcapacity issues
* Elevated energy costs and declining industrial production

The agency simultaneously reduced its Brent crude price forecast for 2026 to $66 per barrel and projected that Sasol's funds-from-operations to debt ratio would decline to 28.7 percent in 2026—falling below the critical 30 percent threshold.

Operational Resilience in Challenging Conditions

Sasol's first quarter 2026 performance metrics aligned with market expectations. The company maintained its South African value chain break-even oil price threshold within the $55-60 per barrel range. Enhanced production volumes and rigorous cost management contributed to this stability.

The international chemicals division recorded revenue growth driven by improved margins and higher sales volumes in the United States. Operational enhancements within South African facilities included:
* Newly commissioned destoning equipment reducing average sinks below 14 percent
* Phased reactivation of previously idled production units
* Improved operational performance at both Natref and Sasolburg facilities

The central question for investors remains whether these operational gains can counterbalance the credit rating pressures and sustain Sasol's recovery trajectory.