Company makes third cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel rates
(Adds expert, background, detail in paragraphs 2-3, 9-11)
By and Essi Lehto
HELSINKI, Sept 11 (Reuters) - Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel organization for the 3rd time this year due to falling costs and also lowered its anticipated sales volumes, sending out the business's share price down 10%.
Neste stated a drop in the price of routine 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 produce renewable diesel has actually developed a supply excess of low-emissions biofuels, hammering earnings margins for refiners and threatening to hinder the nascent market.
Neste in a declaration slashed the expected typical comparable 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 also expects 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 originated from the production of sustainable air travel fuel, of which it is now expected to offer between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen previously, Neste stated.
"Renewable items' sales rates have been adversely affected by a significant decrease in (the) diesel price during the third quarter," Neste said in a declaration.
"At the very same time, waste and residue feedstock costs have actually not decreased and sustainable item market price premiums have stayed weak," the company included.
Industry executives and analysts have stated rapidly broadening Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have revealed they are stopping briefly growth plans in Europe.
While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the negative impact 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 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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