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 strikes biofuel prices
(Adds analyst, 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 prices and also decreased its expected sales volumes, sending the company's share price down 10%.
Neste said a drop in the price of regular diesel had affected 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 sustainable diesel has actually created a supply glut of low-emissions biofuels, hammering profit margins for refiners and threatening to impede the nascent market.
Neste in a declaration slashed the anticipated 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 listed 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 instead of the 4.4 million it had anticipated because the start of the year, it included.
A part of the volume cut came from the production of sustainable aviation fuel, of which it is now anticipated to offer in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen previously, Neste stated.
"Renewable items' list prices have actually been negatively impacted by a significant decrease in (the) diesel price during the third quarter," Neste said in a declaration.
"At the exact same time, waste and residue feedstock rates have not decreased and sustainable item market value premiums have stayed weak," the business included.
and analysts have actually said quickly expanding Chinese biodiesel producers 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 negative effect on biodiesel margins from a lower diesel rate was to be expected, Inderes expert Petri Gostowski stated.
Neste's share rate 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)
