Company makes 3rd cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel rates
(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 company for the 3rd time this year due to falling costs and likewise decreased its anticipated sales volumes, sending the company's share price 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 costs for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has actually produced a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent market.
Neste in a statement slashed the expected typical comparable sales margin of its renewables system to between $360-$480 per tonne of biofuel, below $480-$580 per tonne seen in July and well below the $600-$800 seen in February.
The business now likewise anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead 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 products' list prices have actually been adversely impacted by a substantial decline in (the) diesel rate throughout the 3rd quarter," Neste said in a statement.
"At the same time, waste and residue feedstock rates have not decreased and renewable item market value premiums have remained weak," the company added.
Industry executives and experts have said quickly broadening Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports, while Shell and BP have announced they are stopping briefly growth strategies in Europe.
While the cut in Neste's guidance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable impact on margins from a lower diesel price was to be expected, Inderes expert Petri Gostowski said.
Neste's share price 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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