Refiner Neste Warns Of Weaker Biofuel Outlook Shares Drop
Company makes third cut to renewables organization outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel rates
(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 business for the 3rd time this year due to falling rates and likewise decreased its expected sales volumes, sending 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 costs for waste and residue feedstock remained high.
A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has actually produced a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to restrain the nascent industry.
Neste in a statement slashed the expected 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 business now also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had anticipated because the start of the year, it included.
A part of the volume cut originated from the production of sustainable aviation 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 formerly, Neste said.
"Renewable items' sales costs have actually been adversely affected by a significant reduction in (the) diesel rate during the third quarter," Neste said in a declaration.
"At the exact same time, waste and residue feedstock costs have actually not reduced and eco-friendly item market value premiums have remained weak," the business included.
Industry executives and experts have actually said rapidly broadening Chinese biodiesel manufacturers are looking for new outlets in Asia for their exports, while Shell and BP have revealed they are plans in Europe.
While the cut in Neste's guidance 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 anticipated, Inderes expert Petri Gostowski stated.
Neste's share cost 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; Editing by Terje Solsvik and Jan Harvey)
