Company makes third cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel rates
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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 service for the third time this year due to falling rates and likewise lowered its expected sales volumes, sending out the business's share cost down 10%.
Neste stated a drop in the price of regular 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 renewable diesel has actually produced a supply glut of low-emissions biofuels, hammering profit margins for refiners and threatening to impede the nascent industry.
Neste in a statement slashed the expected typical comparable sales margin of its renewables system 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 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 sustainable air travel fuel, of which it is now expected to offer between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen previously, Neste said.
"Renewable items' prices have actually been negatively impacted by a significant decline in (the) diesel rate throughout the 3rd quarter," Neste said in a declaration.
"At the very same time, waste and residue feedstock costs have actually not reduced and sustainable product market price premiums have stayed weak," the business included.
Industry executives and analysts have actually stated quickly expanding Chinese biodiesel producers are seeking new outlets in Asia for their exports, while Shell and BP have actually announced they are pausing expansion plans in Europe.
While the cut in Neste's assistance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable influence on biodiesel margins from a lower diesel cost was to be anticipated, Inderes analyst Petri Gostowski said.
Neste's share rate 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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