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
market strikes biofuel costs
(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 company for the 3rd time this year due to falling prices and also reduced its anticipated sales volumes, sending the business's share rate down 10%.
Neste said a drop in the price of regular 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 stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has developed a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to hinder the nascent market.
Neste in a statement slashed the expected average comparable sales margin of its renewables unit 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 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 forecasted 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 expected to sell 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 negatively impacted by a considerable decrease in (the) diesel rate throughout the 3rd quarter," Neste said in a statement.
"At the exact same time, waste and residue feedstock costs have not decreased and renewable item market value premiums have actually remained weak," the business included.
Industry executives and experts have actually 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 pausing expansion strategies in Europe.
While the cut in Neste's guidance on sales volumes of sustainable aviation fuel came as a surprise, the negative impact on biodiesel margins from a lower diesel cost was to be expected, Inderes expert Petri Gostowski said.
Neste's share price had actually reversed some losses by 1037 GMT however 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)