Company makes 3rd cut to renewables service outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel rates
(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 service for the third time this year due to falling rates and likewise reduced its anticipated sales volumes, sending out the company's share price down 10%.
Neste stated a drop in the cost of regular diesel had actually affected 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 actually created a supply excess of low-emissions biofuels, hammering earnings margins for refiners and threatening to impede 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, down from $480-$580 per tonne seen in July and well below the $600-$800 seen in February.
The now also anticipates 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 aviation fuel, of which it is now anticipated to sell in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen previously, Neste said.
"Renewable products' sales costs have actually been adversely impacted by a significant decrease in (the) diesel price during the 3rd quarter," Neste said in a declaration.
"At the very same time, waste and residue feedstock rates have actually not decreased and sustainable item market cost premiums have stayed weak," the company added.
Industry executives and experts have actually stated rapidly expanding 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 growth strategies 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 margins from a lower diesel cost was to be anticipated, Inderes analyst Petri Gostowski stated.
Neste's share price 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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