Company makes third cut to renewables business outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel prices
(Adds expert, background, detail in paragraphs 2-3, 9-11)
By Elviira Luoma and Essi Lehto
HELSINKI, Sept 11 (Reuters) - Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel business for the 3rd time this year due to falling rates and also reduced its anticipated sales volumes, sending out the business's share cost down 10%.
Neste said a drop in the rate of regular diesel had impacted what it can charge for the biofuel it makes in Europe and Singapore, while input expenses for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce eco-friendly diesel has produced a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to hinder the nascent market.
Neste in a declaration slashed the expected typical equivalent sales margin of its renewables system to 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 anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had anticipated because 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 sell in between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen formerly, Neste stated.
"Renewable products' prices have been adversely affected by a considerable decrease in (the) diesel cost during the 3rd quarter," Neste stated in a statement.
"At the exact same time, waste and residue feedstock costs have not decreased and eco-friendly item market cost premiums have stayed weak," the business added.
Industry executives and experts have said quickly expanding Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually revealed they are stopping briefly growth plans in Europe.
While the cut in Neste's assistance on sales volumes of sustainable aviation fuel came as a surprise, the negative effect on biodiesel margins from a lower diesel cost was to be anticipated, Inderes expert Petri Gostowski stated.
Neste's share cost had actually some losses by 1037 GMT but 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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