Company makes third cut to renewables service outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel costs
(Adds analyst, 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 service for the third time this year due to falling rates and likewise decreased its expected sales volumes, sending out the business's share rate down 10%.
Neste stated a drop in the cost of regular diesel had actually impacted what it can charge for the biofuel it makes in Europe and Singapore, while for waste and residue feedstock remained high.
A rush by U.S. fuel makers to recalibrate their plants to produce sustainable diesel has developed a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to impede the nascent industry.
Neste in a statement slashed the anticipated typical comparable sales margin of its renewables unit 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 actually forecasted considering that the start of the year, it added.
A part of the volume cut came from the production of sustainable aviation fuel, of which it is now anticipated to offer between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen formerly, Neste stated.
"Renewable items' list prices have actually been negatively impacted by a substantial reduction in (the) diesel rate during the third quarter," Neste stated in a declaration.
"At the exact same time, waste and residue feedstock prices have not decreased and eco-friendly product market value premiums have actually stayed weak," the business added.
Industry executives and experts have actually stated rapidly expanding Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports, while Shell and BP have actually revealed 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 negative effect on biodiesel margins from a lower diesel cost 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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