Company makes third cut to renewables business outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits
biofuel costs
(Adds expert, 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 business for the 3rd time this year due to falling rates and also reduced its expected sales volumes, sending the company's share cost down 10%.
Neste said a drop in the price of
regular diesel had actually affected what it can charge for the
biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock remained 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 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 rather of the 4.4 million it had forecasted considering that 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 offer between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen previously, Neste said.
"Renewable items' prices have been negatively impacted by a significant reduction in (the) diesel cost throughout the third quarter,"
Neste stated in a declaration.
"At the exact same time, waste and residue feedstock prices have not reduced and sustainable product market price premiums have actually remained weak," the company included.
Industry
executives and experts have actually said
rapidly expanding Chinese
biodiesel manufacturers are looking for new
outlets in Asia for their exports, while Shell and BP have revealed they are
stopping briefly
expansion plans in Europe.
While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the
negative impact on
biodiesel margins from a
lower diesel rate was to be anticipated, Inderes expert Petri Gostowski said.
Neste's
share rate had
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;
Editing by Terje Solsvik and Jan Harvey)
