Company makes third 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 organization for the third time this year due to falling rates and also reduced its anticipated sales volumes, sending out the business's share cost down 10%.
Neste stated a drop in the price of routine diesel had actually affected what it can charge for the biofuel it makes in Europe and Singapore, while input expenses for waste and residue feedstock remained 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 profit margins for refiners and threatening to impede the nascent industry.
Neste in a statement slashed the expected typical equivalent 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 actually predicted since the start of the year, it added.
A part of the volume cut came from the production of sustainable air travel fuel, of which it is now anticipated to sell in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen formerly, Neste stated.
"Renewable products' sales prices have been negatively impacted by a considerable decline in (the) diesel cost throughout the third quarter," Neste stated in a statement.
"At the same time, waste and residue feedstock prices have actually not decreased and eco-friendly item market rate premiums have actually stayed weak," the business added.
Industry executives and experts have stated quickly broadening Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have announced they are stopping briefly 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 analyst Petri Gostowski said.
Neste's share price had reversed some losses by 1037 GMT but remained 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)
