Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Company makes third cut to renewables service outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel costs
(Adds analyst, 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 organization for the 3rd time this year due to falling rates and likewise reduced its expected sales volumes, sending out the company's share rate down 10%.
Neste stated 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 expenses 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 excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hinder the nascent industry.
Neste in a declaration slashed the anticipated average similar sales margin of its renewables unit 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 instead of the 4.4 million it had predicted considering that the start of the year, it added.
A part of the volume cut 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, down from in between 500,000 and 700,000 tonnes seen previously, Neste stated.
"Renewable items' prices have actually been adversely affected by a considerable decline in (the) diesel rate throughout the 3rd quarter," Neste stated in a statement.
"At the same time, waste and residue feedstock rates have actually not reduced and sustainable item market value premiums have actually stayed weak," the business added.
Industry executives and analysts have said rapidly expanding Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports, while Shell and BP have actually announced they are stopping briefly growth strategies in Europe.
While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel cost was to be anticipated, Inderes expert Petri Gostowski said.
Neste's share price had 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)