Company makes 3rd cut to renewables service outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits 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 business for the 3rd time this year due to falling prices and also decreased its anticipated sales volumes, sending the company's share cost down 10%.
Neste stated a drop in the cost 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 sustainable diesel has developed a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent market.
Neste in a the expected typical similar sales margin of its renewables unit to between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well below the $600-$800 seen in February.
The company now also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually anticipated 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 sell in between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen previously, Neste stated.
"Renewable items' prices have been adversely affected by a considerable reduction in (the) diesel rate during the 3rd quarter," Neste said in a statement.
"At the same time, waste and residue feedstock rates have actually not decreased and eco-friendly item market cost premiums have remained weak," the business included.
Industry executives and analysts have actually stated quickly expanding Chinese biodiesel producers are seeking brand-new outlets in Asia for their exports, while Shell and BP have revealed they are pausing growth strategies 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 anticipated, Inderes expert Petri Gostowski said.
Neste's share rate had actually 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
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Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Lanny Forrest edited this page 2025-01-18 20:41:55 +11:00