Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Company makes 3rd cut to renewables company outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel prices
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By Elviira Luoma and Essi Lehto
HELSINKI, Sept 11 (Reuters) - Finnish refiner Neste on Wednesday cut the margin outlook for its biofuel organization for the third time this year due to falling prices and also lowered its expected sales volumes, sending out the company's share price down 10%.
Neste stated a drop in the rate of routine diesel had impacted what it can charge for the biofuel it makes in Europe and Singapore, while input expenses for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce eco-friendly diesel has created a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to hinder the nascent industry.
Neste in a statement slashed the anticipated average similar 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 listed below the $600-$800 seen in February.
The business now likewise expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually forecasted since 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 anticipated to offer between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste said.
"Renewable items' prices have been adversely affected by a considerable decrease in (the) diesel cost during the third quarter," Neste stated in a declaration.
"At the very same time, waste and residue feedstock costs have not reduced and eco-friendly item market price premiums have actually stayed weak," the business included.
Industry executives and experts have stated rapidly expanding Chinese biodiesel manufacturers are seeking 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 air travel fuel came as a surprise, the unfavorable influence on biodiesel margins from a lower diesel price was to be anticipated, 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, and Boleslaw Lasocki; Editing by Terje Solsvik and Jan Harvey)