Company makes third cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel costs
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By Elviira Luoma and Essi Lehto
HELSINKI, Sept 11 (Reuters) - Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel company for the third time this year due to falling prices and likewise decreased its expected sales volumes, sending the company's share rate down 10%.
Neste stated a drop in the rate of routine diesel had actually affected what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock remained high.
A rush by U.S. fuel makers to recalibrate their plants to produce eco-friendly diesel has actually created a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to hinder the nascent market.
Neste in a statement slashed the expected average equivalent sales margin of its renewables unit to in between $360-$480 per tonne of biofuel, below $480-$580 per tonne seen in July and well below the $600-$800 seen in February.
The business now also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had forecasted since the start of the year, it included.
A part of the volume cut came from the production of fuel, of which it is now expected to offer between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste said.
"Renewable items' list prices have actually been negatively impacted by a considerable decrease in (the) diesel rate throughout the 3rd quarter," Neste said in a statement.
"At the exact same time, waste and residue feedstock prices have actually not decreased and eco-friendly product market value premiums have actually remained weak," the company added.
Industry executives and experts have actually said quickly broadening Chinese biodiesel producers are seeking new outlets in Asia for their exports, while Shell and BP have announced they are stopping briefly expansion strategies in Europe.
While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable influence on biodiesel margins from a lower diesel price was to be anticipated, Inderes expert Petri Gostowski stated.
Neste's share rate had actually reversed some losses by 1037 GMT but stayed down 5.8% on the day and 48% lower year-to-date. (Reporting by Elviira Luoma, Essi Lehto and Boleslaw Lasocki
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Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
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