Company makes third cut to renewables company 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 Elviira Luoma and Essi Lehto
HELSINKI, Sept 11 (Reuters) - Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel business for the 3rd time this year due to falling prices and also lowered its anticipated sales volumes, sending the company's share rate down 10%.
Neste stated a drop in the cost of routine diesel had actually affected what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock remained high.
A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has actually created a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to restrain the nascent market.
Neste in a declaration slashed the expected typical equivalent 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 company now likewise expects renewables-based in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had forecasted given that the start of the year, it added.
A part of the volume cut came from the production of sustainable air travel fuel, of which it is now expected to sell between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste said.
"Renewable items' list prices have been adversely affected by a substantial reduction in (the) diesel price throughout the 3rd quarter," Neste said in a declaration.
"At the same time, waste and residue feedstock rates have not reduced and renewable product market value premiums have remained weak," the company included.
Industry executives and experts have said rapidly broadening Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have announced they are pausing expansion plans 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 analyst Petri Gostowski said.
Neste's share cost 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
1
Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Delilah Joe edited this page 3 months ago