Company makes third cut to renewables company outlook this year
Reduces both margin and volume outlook
Weaker diesel market prices
(Adds expert, background, information 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 organization for the 3rd time this year due to falling rates and likewise lowered its anticipated sales volumes, sending the business's share cost down 10%.
Neste stated a drop in the price 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 remained high.
A rush by U.S. fuel makers to recalibrate their plants to produce sustainable diesel has actually created a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent industry.
Neste in a statement slashed the expected average similar 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 also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually anticipated because 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 expected to offer between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen previously, Neste stated.
"Renewable products' list prices have been adversely impacted by a considerable decrease in (the) diesel cost throughout the 3rd quarter," Neste said in a declaration.
"At the very same time, waste and residue feedstock prices have actually not reduced and renewable product market cost premiums have actually stayed weak," the business included.
Industry executives and analysts have actually said quickly broadening Chinese biodiesel producers are seeking new outlets in Asia for their exports, while Shell and BP have actually announced they are pausing growth plans in Europe.
While the cut in Neste's guidance 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 said.
Neste's share cost had actually reversed 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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