Motorists in South Africa can expect muted fuel price changes in September, mid-month data from the Central Energy fund shows.
Petrol prices are anticipated to show no change for 93 grade fuel, while 95 grade could see a slight decrease. Diesel drivers could see a marginal decrease in prices as well, the CEF’s data shows.
These are the expected changes at mid-August:
- Petrol 95: 9 cents per litre decrease
- Petrol 93: No change
- Diesel 0.05%: 7 cents per litre decrease
- Diesel 0.005%: 7 cents per litre decrease
- Illuminating paraffin: 12 cents per litre decrease
The data reflects a flattening of both indicators used to calculate local fuel prices. This includes a range bound rand/dollar exchange rate, trapped at between R17.20 and R17.60 for August, while international product prices have stabilised.
The rand has weakened during the course of August, leading to an under-recovery in fuel prices of around 19 cents per litre.
The local unit traded at R17.35 to the dollar in mid-morning trade on Monday (17 August), representing a stronger position than its weekend close of R17.40. The rand has started the week on the front foot after president Cyril Ramaphosa announced a sweeping removal of lockdown restrictions over the weekend.
The latest measures will open up remaining sectors of the economy – and will help salvage businesses and jobs.
However, many economists and analysts believe that the easing of restrictions come too late, with permanent damage already done to the economy.
Dawie Roodt executive director & chief economist at Efficient Group said that at least 3 million jobs have been lost thanks to the lockdown – one million permanently.
“I foresee fairly rapid growth in some sectors such as the hospitality and restaurant industries but the bottom line is that the South African economy has been broken and it is going to take years for it to recover,” Roodt said.
“Nobody knows precisely how much debt has been piled up during the lockdown but the fact is that it is probably more than most economists can guesstimate at this time. Many of the businesses that closed their doors during the lockdown will never reopen and those jobs and the contribution that they made to the economy in taxes are lost forever,” he said.
Bank of America, meanwhile, said that South Africa’s weak fundamentals are locked in, with little in the way from government, in terms of policy and credible execution, to shift this position.
Factoring in the movements of the dollar, which also largely drives local rand stability, analysts see the rand shifting in a wide range of between R15.75 and R18.00 in 2020.
International product prices
International product prices have also been fairly stable over the last month, with the key component of this – the international oil price – rising to five-month highs. Refining costs for petrol and diesel are different, but have reached parity, according to the CEF’s data, with petrol refining costs rising.
While prices are up, they are trading in a narrow range, and are fairly stable given the wide fluctuations seen over the past few months as economies locked down due to the global Covid-19 pandemic.
Record crude imports from the world’s top importer China, and the easing of Covid-19 restrictions globally have supported oil prices, although new waves of coronavirus outbreaks in several countries are expected to cool consumption again.
International prices are around $44 a barrel, up from the $41 a barrel close in July. Analysts say that the foothold in the $40+ range is more stable.
The contribution of international petroleum prices to local costs is lower than last month, pushing an over-recovery of between 18 and 28 cents per litre.
This is how the prices could be reflected at the pumps:
|Fuel (Inland)||August Official||September Expected|
|0.05% Diesel (wholesale)||R13.48||R13.41|
|0.005% Diesel (wholesale)||R13.52||R13.45|