Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Company makes 3rd cut to renewables service outlook this year
both margin and volume outlook
Weaker diesel market hits biofuel prices
(Adds analyst, 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 organization for the 3rd time this year due to falling prices and likewise decreased its anticipated sales volumes, sending out the company’s share cost down 10%.
Neste said a drop in the price of regular diesel had affected 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 sustainable diesel has developed a supply excess of low-emissions biofuels, hammering profit margins for refiners and threatening to hinder the nascent market.
Neste in a declaration slashed the expected typical similar sales margin of its renewables system to in 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 business now likewise anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually anticipated since 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 anticipated to offer between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen formerly, Neste stated.
“Renewable items’ sales costs have been negatively affected by a considerable decrease in (the) diesel price throughout the 3rd quarter,” Neste said in a declaration.
“At the exact same time, waste and residue feedstock prices have actually not decreased and eco-friendly item market price premiums have remained weak,” the company added.
Industry executives and experts have actually said quickly expanding Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports, while Shell and BP have actually announced they are stopping briefly growth strategies in Europe.
While the cut in Neste’s assistance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable impact on biodiesel margins from a lower diesel rate was to be anticipated, Inderes expert Petri Gostowski said.
Neste’s share cost 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; Editing by Terje Solsvik and Jan Harvey)
