Company makes third cut to renewables company outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel costs
(Adds expert, 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 company for the third time this year due to falling rates and likewise lowered its expected sales volumes, sending the company's share cost down 10%.
Neste stated a drop in the rate of routine diesel had actually affected 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 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 typical similar sales margin of its renewables unit to 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 business now also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually forecasted considering that 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 formerly, Neste said.
"Renewable products' list prices have actually been adversely impacted by a significant reduction in (the) diesel cost throughout the third quarter," Neste said in a statement.
"At the exact same time, waste and residue feedstock costs have not decreased and eco-friendly item market value premiums have stayed weak," the business added.
Industry executives and experts have said rapidly broadening Chinese biodiesel producers are seeking brand-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 guidance on sales volumes of sustainable aviation 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 price 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 Lasocki
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Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
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