Company makes third cut to renewables business outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel prices
(Adds expert, background, information in paragraphs 2-3, 9-11)
By Elviira Luoma and Essi Lehto
HELSINKI, Sept 11 (Reuters) refiner Neste on Wednesday cut the margin outlook for its biofuel company for the 3rd time this year due to falling prices and likewise reduced its expected sales volumes, sending out the company'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 costs for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has created a supply excess of low-emissions biofuels, hammering earnings margins for refiners and threatening to hamper the nascent market.
Neste in a declaration slashed the anticipated typical equivalent sales margin of its renewables unit 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 rather 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 air travel fuel, of which it is now expected to offer in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen formerly, Neste said.
"Renewable items' sales rates have actually been adversely impacted by a significant decline in (the) diesel rate throughout the third quarter," Neste said in a statement.
"At the very same time, waste and residue feedstock prices have not decreased and renewable item market value premiums have stayed weak," the company added.
Industry executives and analysts have actually said quickly broadening Chinese biodiesel producers are seeking new outlets in Asia for their exports, while Shell and BP have actually revealed they are pausing expansion 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 price was to be anticipated, Inderes expert Petri Gostowski stated.
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
1
Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
karinecalloway edited this page 1 day ago