Company makes third cut to renewables business outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel prices
(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 organization for the third time this year due to falling costs and likewise decreased its anticipated sales volumes, sending out the business's share cost down 10%.
Neste said a drop in the cost of regular diesel had actually 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 developed 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 comparable 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 company 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 anticipated considering that 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 sell in between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen previously, Neste stated.
"Renewable items' list prices have actually been adversely affected by a significant decrease in (the) diesel cost throughout the third quarter," Neste stated in a declaration.
"At the same time, waste and residue feedstock costs have not decreased and eco-friendly item market rate premiums have actually remained weak," the company added.
Industry executives and experts have actually said quickly broadening Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have announced they are pausing growth plans in Europe.
While the cut in Neste's guidance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel rate was to be anticipated, Inderes expert Petri Gostowski said.
Neste's share rate had actually 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; Editing by Terje Solsvik and Jan Harvey)
