Company makes third cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel rates
(Adds analyst, 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 service for the third time this year due to falling prices and also
reduced its expected sales volumes, sending out the
business's share price down 10%.
Neste said a drop in the cost of routine diesel had 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 eco-friendly diesel has actually
developed a supply glut of low-emissions biofuels, hammering revenue
margins for refiners and
threatening to restrain the nascent market.
Neste in a
statement slashed the anticipated typical equivalent sales margin of its renewables system to in 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 company now also expects renewables-based sales
volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had
forecasted since the start of the year, it added.
A part of the
volume cut originated from the production of sustainable aviation 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 affected by a considerable decline in (the) diesel cost during the third quarter," Neste said in a statement.
"At the very same time, waste and residue feedstock costs have not decreased and renewable product market value premiums have actually remained weak," the business added.
Industry executives and experts have actually said quickly broadening Chinese
biodiesel producers are seeking brand-new outlets in Asia for their exports, while Shell and BP have announced they are stopping briefly
expansion strategies in Europe.
While the cut in Neste's assistance on sales volumes of sustainable aviation fuel came as a surprise, the negative effect on
biodiesel margins from a lower diesel cost was to be expected, Inderes analyst Petri Gostowski stated.
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)
