Company makes third cut to renewables company outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel costs
(Adds analyst, 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 company for the third time this year due to falling prices and also reduced its anticipated sales volumes, sending the company's share rate down 10%.
Neste said a drop in the cost of regular diesel had affected 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 diesel has actually created a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to impede the nascent market.
Neste in a declaration slashed the anticipated typical comparable sales margin of its renewables unit to in between $360-$480 per tonne of biofuel, below $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 instead of the 4.4 million it had actually anticipated considering that the start of the year, it included.
A part of the volume cut came from the production of sustainable aviation fuel, of which it is now anticipated to sell between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen formerly, Neste said.
"Renewable items' list prices have been adversely affected by a substantial decrease in (the) diesel price throughout the third quarter," Neste stated in a declaration.
"At the very same time, waste and residue feedstock prices have actually not reduced and renewable item market cost premiums have actually stayed weak," the company included.
Industry executives and experts have actually stated quickly broadening Chinese biodiesel producers are looking for new outlets in Asia for their exports, while Shell and BP have actually announced they are pausing growth strategies in Europe.
While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the negative influence on biodiesel margins from a lower diesel cost was to be anticipated, Inderes analyst 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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