Company makes third cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes 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 third time this year due to falling prices and likewise lowered its anticipated sales volumes, sending the business's share rate down 10%.
Neste said a drop in the price of routine diesel had affected what it can charge for the 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 renewable diesel has actually developed a supply glut 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 unit to in between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well listed below the $600-$800 seen in February.
The company now likewise expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead 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 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 products' list prices have been negatively affected by a significant decline in (the) diesel price throughout the third quarter," Neste stated in a statement.
"At the exact same time, waste and residue feedstock rates have not decreased and renewable product market rate premiums have actually remained weak," the business added.
Industry executives and analysts have actually stated quickly broadening Chinese biodiesel manufacturers are looking for new outlets in Asia for their exports, while Shell and BP have revealed they are stopping briefly growth strategies in Europe.
While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the negative effect on biodiesel margins from a lower diesel cost was to be expected, Inderes analyst Petri Gostowski stated.
Neste's share rate had actually reversed some losses by 1037 GMT however stayed 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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