Finnish refiner and biofuels maker Neste warned of lower sales and weaker margins in the third quarter of 2021 as a major turnaround, high feedstock prices and the impact of COVID-19 pandemic continue to dent its performance.
Neste, the world's biggest maker of renewable diesel, said a seven-week turnaround at its Singapore biorefinery will decrease operating profit by Eur90 million, while a planned catalyst change at its Rotterdam facility during Q4 will lower operating profit by Eur50 million.
"Visibility in the global economic development still remains low due to the COVID-19 pandemic," Neste said reporting its Q2 earnings. "As a consequence, we expect volatility in the oil products and renewable feedstock markets to remain high."
Waste and residue markets are anticipated to remain tight due to strong demand, Neste said, with third-quarter sales margins seen "healthy", but lower than the $700/mt in the second quarter of the year.
"Oil products' third-quarter market demand will continue to be depressed as a result of the COVID-19 pandemic....As the market is seen to be generally over-supplied, the reference margin is expected to remain low and volatile," Neste said.
Neste said key projects to expand renewables capacity at its Singapore plant and to boost sustainable aviation fuel, or SAF, production from its existing biorefinery in Rotterdam, are both on track to start up at the beginning and at the end of 2023, respectively.
Neste's current renewable products' capacity in Finland, the Netherlands and Singapore is approximately 3.2 million mt/year. The Rotterdam and Singapore facilities both have an annual capacity of more than 1.3 million mt of renewable products. The capacity expansion in Singapore is aimed at bringing its total renewables product capacity to 4.5 million mt/year in 2023. The company's 260,000 b/d Porvoo refinery is also being revamped to focus on co-processing renewable and circular raw materials.