Company makes 3rd cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel prices
(Adds analyst, 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 service for the third time this year due to falling prices and also reduced its expected sales volumes, sending the company's share price 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 expenses for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce sustainable diesel has actually created a supply glut of low-emissions biofuels, hammering profit margins for refiners and threatening to impede the nascent market.
Neste in a statement slashed the expected average 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 company now likewise 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 included.
A part of the volume cut originated from the production of sustainable air travel fuel, of which it is now anticipated to sell in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen formerly, Neste stated.
"Renewable items' list prices have actually been adversely impacted by a considerable reduction in (the) diesel price throughout the 3rd quarter," Neste stated in a declaration.
"At the same time, waste and residue feedstock costs have not reduced and renewable item market rate premiums have actually remained weak," the business added.
Industry executives and experts have actually stated quickly expanding Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have actually announced they are stopping briefly expansion plans in Europe.
While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the negative impact on biodiesel margins from a lower diesel rate was to be anticipated, Inderes expert Petri Gostowski stated.
Neste's share cost had actually 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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