Company makes third cut to renewables organization outlook this year
Reduces both margin and volume outlook
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 3rd time this year due to falling costs and likewise reduced its expected sales volumes, sending the business's share rate down 10%.
Neste stated a drop in the rate of routine diesel had impacted what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce sustainable diesel has actually produced a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to restrain the nascent market.
Neste in a statement slashed the expected average comparable sales margin of its renewables unit to between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well listed below the $600-$800 seen in February.
The company now also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually anticipated considering that the start of the year, it added.
A part of the volume cut came from the production of sustainable aviation fuel, of which it is now anticipated to offer between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste said.
"Renewable products' list prices have been negatively affected by a considerable reduction in (the) diesel price throughout the third quarter," Neste stated in a declaration.
"At the same time, waste and residue feedstock rates have actually not decreased and renewable item market price premiums have actually remained weak," the company added.
Industry executives and experts have said rapidly expanding Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have revealed they are pausing expansion plans in Europe.
While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the negative effect on biodiesel margins from a lower diesel cost was to be anticipated, Inderes analyst Petri Gostowski said.
Neste's share cost had reversed some losses by 1037 GMT however remained 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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