Company makes 3rd cut to renewables company outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes 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 company for the third time this year due to falling costs and also reduced its anticipated sales volumes, sending the business's share rate down 10%.
Neste said a drop in the price of regular 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 created a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hinder the nascent industry.
Neste in a declaration slashed the expected typical 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 business now likewise anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually predicted considering that the start of the year, it added.
A part of the volume cut originated from the production of sustainable aviation fuel, of which it is now expected to sell in between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen previously, Neste said.
"Renewable products' prices have been negatively affected by a substantial decrease in (the) diesel cost throughout the third quarter," Neste said in a statement.
"At the same time, waste and residue feedstock rates have not reduced and sustainable item market price premiums have actually stayed weak," the business included.
Industry executives and analysts have said quickly expanding Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually announced they are pausing expansion in Europe.
While the cut in Neste's guidance on sales volumes of sustainable aviation fuel came as a surprise, the negative influence on biodiesel margins from a lower diesel rate was to be expected, Inderes expert Petri Gostowski stated.
Neste's share cost had actually reversed some losses by 1037 GMT but 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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