Refiner Neste Warns Of Weaker Biofuel Outlook Shares Drop
Company makes 3rd cut to renewables service outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes 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 3rd time this year due to falling rates and likewise reduced its anticipated sales volumes, sending the business's share rate down 10%.
Neste stated a drop in the rate of regular 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 sustainable diesel has produced a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent market.
Neste in a statement slashed the expected typical similar sales margin of its renewables system to in 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 also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually predicted because the start of the year, it .
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, down from between 500,000 and 700,000 tonnes seen formerly, Neste stated.
"Renewable items' prices have been negatively impacted by a substantial reduction in (the) diesel price throughout the third quarter," Neste said in a declaration.
"At the same time, waste and residue feedstock prices have not decreased and renewable item market value premiums have stayed weak," the business included.
Industry executives and experts have said quickly expanding Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually announced they are stopping briefly expansion plans in Europe.
While the cut in Neste's guidance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable impact on biodiesel margins from a lower diesel rate was to be anticipated, Inderes analyst 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)
