Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Company makes third cut to renewables company outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel costs
(Adds expert, 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 service for the 3rd time this year due to falling prices and also reduced its expected sales volumes, sending the business's share cost down 10%.
Neste said a drop in the price of routine diesel had actually impacted what it can charge for the biofuel it makes in Europe and Singapore, while input expenses for waste and residue feedstock remained high.
A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has developed a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hinder 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 listed below the $600-$800 seen in February.
The company now also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually predicted because the start of the year, it included.
A part of the volume cut originated from the production of sustainable air travel fuel, of which it is now anticipated to offer between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen formerly, Neste stated.
"Renewable products' list prices have been negatively impacted by a considerable decrease in (the) diesel price throughout the third quarter," Neste said in a statement.
"At the very same time, waste and residue feedstock costs have actually not decreased and eco-friendly item market value premiums have stayed weak," the business added.
Industry executives and experts have said quickly broadening Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually revealed they are stopping briefly expansion plans in Europe.
While the cut in Neste's assistance on sales volumes of sustainable aviation fuel came as a surprise, the negative influence on biodiesel from a lower diesel cost was to be expected, Inderes analyst Petri Gostowski stated.
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)