KAP: ethylene price dispute was decided in favor of Safripol

KAP: ethylene price dispute was decided in favor of Safripol

KAP’s Ethylene Supply Dispute with Sasol Sparks Market Concerns

South Africa’s Competition Commission is investigating allegations that Sasol, the country’s dominant ethylene supplier, has abused its monopoly in the petrochemical sector. KAP Industrial, parent company of Safripol—the nation’s largest plastics manufacturer— filed legal proceedings on July 2, 2024, seeking an expedited review of Sasol’s compliance with the Competition Act. The lawsuit highlights Safripol’s reliance on Sasol for ethylene, a critical feedstock for producing polyethylene, polypropylene, and PET, and raises concerns about supply risks tied to Sasol’s pricing and market dominance.

Sasol’s monopoly traces its roots to the Apartheid era, when trade sanctions forced the company to develop coal-to-chemicals technology using South Africa’s coal reserves. This historical advantage, combined with Sasol’s Secunda facility— producing 150,000 barrels of liquid fuels daily—has entrenched its role as the sole supplier of ethylene in the country. Roderick Crompton, a liquid-fuels expert, notes that while Sasol’s operations add significant economic value, they also entail higher costs and environmental challenges compared to global competitors using oil or shale gas feedstocks.

The plastics industry, contributing $4.5 billion to South Africa’s GDP in 2022, faces mounting pressure as Safripol warns of potential operational disruptions if Sasol follows through on threats to cut ethylene supplies. Meanwhile, critics argue that KAP’s legal action may reflect strategic self-interest rather than a genuine push for competition. Shamiso Mupara, an environmental activist, points to Safripol’s prior efforts to secure tariffs against Chinese imports, suggesting the lawsuit is part of broader industry protectionism.

The outcome of this dispute could reshape South Africa’s petrochemical landscape. While Crompton acknowledges that Sasol’s monopoly stifles investment in alternative ethylene production, he also notes the lack of regulatory barriers preventing competitors from entering the market. As the Competition Commission deliberates, stakeholders await clarity on whether Sasol’s practices violate antitrust laws—and what reforms might follow to balance market competition with industrial stability.

(https://www.chemistryworld.com/news/south-african-lawsuit-challenges-sasols-ethylene-monopoly/4022475.article): Chemistry World, 2024; (https://www.news24.com/business/companies/big-plastic-producer-warns-of-collapse-amid-sasol-ethylene-dispute-20251029-1077): News24, 2025.