Company makes third cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel prices
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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 rates and likewise decreased its anticipated sales volumes, sending out the company's share price down 10%.
Neste said a drop in the rate 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 sustainable diesel has actually created a supply glut of low-emissions biofuels, hammering profit margins for refiners and threatening to hamper the nascent market.
Neste in a declaration slashed the anticipated typical similar sales margin of its renewables unit to 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 also 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 included.
A part of the came from the production of sustainable air travel fuel, of which it is now anticipated to sell in between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen formerly, Neste said.
"Renewable products' list prices have been negatively affected by a considerable decline in (the) diesel rate throughout the 3rd quarter," Neste said in a declaration.
"At the same time, waste and residue feedstock rates have actually not reduced and renewable product market price premiums have stayed weak," the business added.
Industry executives and analysts have actually stated quickly expanding Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have revealed they are pausing growth plans in Europe.
While the cut in Neste's assistance on sales volumes of sustainable aviation 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 rate had actually 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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