Refiner Neste Warns Of Weaker Biofuel Outlook Shares Drop
Company makes third cut to renewables business outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel costs
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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 third time this year due to falling rates and likewise lowered its anticipated sales volumes, sending the rate down 10%.
Neste said 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 expenses for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce eco-friendly diesel has actually developed a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent market.
Neste in a statement slashed the expected typical comparable 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 likewise expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had predicted given that the start of the year, it included.
A part of the volume cut came from the production of sustainable air travel fuel, of which it is now anticipated to offer in between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen formerly, Neste said.
"Renewable items' prices have actually been adversely impacted by a considerable decline in (the) diesel price during the third quarter," Neste said in a statement.
"At the exact same time, waste and residue feedstock prices have not reduced and renewable item market price premiums have actually stayed weak," the company included.
Industry executives and experts have stated quickly expanding Chinese biodiesel producers are looking for new outlets in Asia for their exports, while Shell and BP have announced they are pausing growth strategies in Europe.
While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the negative effect on biodiesel margins from a lower diesel cost was to be expected, Inderes analyst 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)