Neste: Renewables segment impacted by weak margins in Q1
Neste operates a biorefinery in Rotterdam. / SOURCE: Neste
April 30, 2024
BY Erin Voegele
Neste Corp. released first quarter results on April 25, reporting that the company’s operations were negatively impacted by weaker renewable diesel margins during the three-month period. Sustainable aviation fuel (SAF) sales volumes are expected to increase throughout 2024.
Neste’s Renewable Products segment reported first quarter comparable EBITDA of EUR 242 million, down from EUR 415 million during the same period of 2023. The comparable sales margin fell to $562 per ton, down from $945 per ton during the first quarter of last year. Neste said the segment was impacted by the challenging market as more renewable capacity was brought online, particularly additional renewable diesel capacity. The company specifically cited reduced prices for D4 biomass-based diesel renewable identification numbers (RINs) as having a material impact on U.S. margins during the first quarter. The European market was also weaker as renewable diesel premium levels decreased substantially.
The proportion of waste and residue inputs processed by the Renewable Products business was at 91%, down from 96% during the first quarter of 2023. Neste also said the average feedstock price was down slightly when compared to the previous quarter and noted that the Martinez Renewables facility in California had a diluting impact on the company’s overall sales margin. That plant, a joint venture between Neste and Marathon Petroleum, is currently operating at less than 50% capacity following a fire that occurred in late 2023.
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Neste’s own renewables production facilities operated an at average utilization rate of 88% during the quarter, down from 93% during the same period of 2023. The company noted that production at the second line of the Singapore facility was stable during the three-month period, with production of SAF ramped up according to plan.
Renewables sales volumes for the first quarter reached 849,000 tons, up from 678,000 tons during the same period of 2023. Neste attributed the growth to newly operational production capacity. Sales volumes, however, were also impacted by seasonally low demand, the build-up of inventories in the SAF supply chain and preparation for upcoming maintenance turnarounds.
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SAF sales are expected to increase from the second quarter onwards, growing toward the end of the year. During the first quarter, approximately 51% of renewable diesel and SAF sales volumes were sold into the European market, with 49% sold in North America, compared to 65% and 35%, respectively, during the same quarter of last year.
For the full year 2024, Neste is predicting total Renewable Products sales volumes will increase over 2023, reaching approximately 4.4 million metric tons. SAF is expected to account for 500,000 to 1 million metric tons of sales. Renewable Products’ full-year 2024 average comparable sales margin is expected to be in the range of $600 to $800 per ton.
A full copy of Neste’s first quarter report is available on the company’s website.
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