Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Company makes 3rd cut to renewables service outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel rates
(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 company for the third time this year due to falling prices and likewise lowered its expected sales volumes, sending out the business's share cost down 10%.
Neste stated a drop in the rate of regular diesel had actually affected what it can charge for the biofuel it makes in Europe and Singapore, while input expenses for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has actually created a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to impede the nascent market.
Neste in a declaration slashed the anticipated average 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 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 anticipated given that 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 anticipated to sell in between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, .
"Renewable items' list prices have been adversely impacted by a substantial reduction in (the) diesel cost during the third quarter," Neste stated in a statement.
"At the same time, waste and residue feedstock prices have not decreased and eco-friendly item market price premiums have stayed weak," the company included.
Industry executives and analysts have actually 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 growth strategies in Europe.
While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel rate was to be expected, 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; Editing by Terje Solsvik and Jan Harvey)