Neste expects lower HVO sales, tight feedstock in 3Q

Finnish biofuels producer Neste expects sales of renewable diesel, or hydrotreated vegetable oil (HVO), to fall in the third quarter because of scheduled maintenance at its Singapore refinery.

The company's renewables production facilities operated at an average 96pc utilisation rate in the second quarter, down from 104pc in the first quarter. HVO production was 764,000t in the April-June period, down from 829,000t in January-March. Sales were 732,000t, a drop of 11,000t from the previous quarter. Around 61pc of sales went to the European market and the rest to North America.

Neste expects waste and residue markets to remain tight with robust demand, and for volatility in feedstocks market to be high because of poor visibility surrounding global economic development. Renewable raw-material prices surged again in the second quarter, reflecting strong fundamentals in vegetable oils and waste and residues, Neste said. The share of waste and residue of the firm's renewable material input rose to 93pc in the quarter from 90pc in the first three months of the year.

The renewables sector of Neste's business made a comparable operating profit of €287mn ($338mn) in the second quarter, down by 2.4pc on the quarter and by 6.8pc year on year.

The company expects third-quarter sales margins to be lower than in the second quarter, and for utilisation rates of its renewable production facilities to remain high. A planned turnaround at Neste's Singapore plant will have a negative effect of around €90mn on the renewable segment's comparable operating profits, and a four-week catalyst change at its Rotterdam refinery in the fourth quarter will have a negative effect of around €50mn.

The Singapore renewables capacity expansion project is proceeding according to schedule, Neste said. It will expand the firm's annual renewables production capacity by up to 1.3mn t as of the first quarter of 2023. A Rotterdam sustainable aviation fuel (SAF) optionality project will SAF capacity by 500,000t by the end of 2023. The Rotterdam refinery produces mainly renewable diesel.

Neste will have capacity to produce 1.5mn t/yr of biojet by the end of 2023.

The company said it is in the definition phase in preparation for a possible next renewables products refinery in Rotterdam, and aims at an investment decision late this year or in early 2022.

Neste also operates oil refineries. Its overall profit was €431mn in the second quarter.

By Giulia Squadrin