Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Company makes third cut to renewables business outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel rates
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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 organization for the 3rd time this year due to falling rates and also reduced its expected sales volumes, sending the business's share price down 10%.
Neste stated a drop in the price of routine diesel had impacted what it can charge for the 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 created a supply excess of low-emissions biofuels, hammering profit margins for refiners and threatening to restrain the nascent industry.
Neste in a declaration slashed the anticipated average equivalent sales margin of its renewables system to between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well listed below the $600-$800 seen in February.
The business now likewise expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had predicted because the start of the year, it included.
A part of the volume cut came from the production of sustainable air travel fuel, of which it is now anticipated to offer in between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen formerly, Neste said.
"Renewable items' sales prices have actually been negatively affected by a considerable decrease in (the) diesel price during the 3rd quarter," Neste said in a declaration.
"At the exact same time, waste and residue feedstock costs have actually not decreased and eco-friendly product market value premiums have actually remained weak," the company added.
Industry executives and analysts have stated quickly expanding Chinese biodiesel manufacturers are looking for new outlets in Asia for their exports, while Shell and BP have actually revealed they are pausing expansion plans in Europe.
While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable influence on biodiesel margins from a lower diesel rate was to be expected, Inderes analyst Petri Gostowski said.
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; Editing by Terje Solsvik and Jan Harvey)