Neste reports higher SAF sales in Q2
Finnish refiner Neste announced financial results for the second quarter of 2024 wherein it reported sales of 65,000 tonnes of sustainable aviation fuel (SAF), higher than 41,000 tonnes in 1Q of 2024 and 40,000 tonnes of 2Q 2023. Overall, during the six months, Neste sold 105,000 tonnes of SAF compared to 63,000 tonnes in the first half of 2023.
Production was also higher in the first half of 2024 at 331,000 tonnes (utilisation rate of 84%) compared to 93,000 tonnes (utilisation rate of 100%) in the same period last year.
To note, Neste’s nameplate production capacity for renewable products increased to 4.5Mton per annum by the end of June 2024 compared to 3.3Mton per annum in 2023.
The company’s comparable renewable products EBIDTA during the second quarter under review clocked in at €152m, significantly lower than €513m in the same period last year. The sharp decline came on the back of steep fall in renewable products margin to $382 per tonne from $800 per tonne in the same period last year.
“As a result of the rapidly changed market conditions, the second-quarter comparable sales margin includes a one-off valuation loss in our bioticket and credit inventories totalling -€36m, equivalent to -$40/ton in comparable sales margin,” said the company in its earnings announcement.
“The renewables sales volume during the quarter totalled 955 (957) thousand tons, impacted by the preparation for the upcoming maintenance shutdowns at our refineries both in Rotterdam and Singapore. We continued our efforts to grow the SAF business and we expect our SAF sales to grow clearly in the third and fourth quarter.”
In its outlook for the remainder of 2024, the company said that it is expecting renewable products’ sales to increase from 2023 and to reach approximately 4.4Mt (+/- 10%) in 2024, out of which SAF sales volume is expected to be 0.5–0.7 (previously 0.5–1.0) Mton.
Meanwhile, it said the full-year average margins from renewable products’ in 2024 is expected to be in the range of $480–580/ton (previously $480-650/ton).
Meanwhile, the company’s cash investments totalled €455m in the second quarter with majority of the outflow owing to Porvoo major turnaround, Rotterdam expansion project and SAF project in Rotterdam.
Carl Nyberg, Neste’s interim executive vice president for renewables supply chain and sustainability, said that: “We are facing a tough market situation. There is no going around that. On the other hand, we also see positive momentum building, especially in the SAF market. The SAF sales is proceeding and the reference price differential for SAF compared to renewable diesel widened slightly at the end of the second quarter.”
Nyberg further added that the company expects momentum to drive SAF sales at the end of the year as EU Refuel regulation is set to kick in demand.
“So when we look at the buildup of the SAF market, it’s good to remember that the year 2024 is still based on voluntary demand and only next year we are going to be – there are going to be significant mandates in place. Most notably of course the Refuel EU aviation, this will substantially change the soft market dynamics and clearly driving demand. While mandates will be in place in 30 countries and states, we also continue to see soft incentive programs emerging and also playing an important role in the market,” added Nyberg during the earnings call.