Company makes third cut to renewables service 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 service for the 3rd time this year due to falling costs and also reduced its anticipated sales volumes, sending out the business's share cost down 10%.
Neste stated a drop in the price of routine diesel had actually 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 renewable diesel has actually developed a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to impede the nascent industry.
Neste in a statement slashed the expected average similar sales margin of its renewables system to 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 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 since the start of the year, it added.
A part of the volume cut came from the of sustainable air travel fuel, of which it is now expected to offer 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 actually been adversely affected by a substantial reduction in (the) diesel cost during the third quarter," Neste said in a statement.
"At the exact same time, waste and residue feedstock costs have not decreased and eco-friendly product market rate premiums have stayed weak," the business added.
Industry executives and analysts have stated rapidly broadening Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports, while Shell and BP have revealed they are stopping briefly expansion 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 price was to be anticipated, Inderes expert Petri Gostowski said.
Neste's share rate had 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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