Company makes third cut to renewables service outlook this year
Reduces both margin and volume outlook
Weaker diesel market strikes biofuel costs
(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 third time this year due to falling prices and also reduced its anticipated sales volumes, sending the business's share cost down 10%.
Neste stated a drop in the price of routine diesel had impacted 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 renewable diesel has produced a supply excess of low-emissions biofuels, hammering profit margins for refiners and threatening to hinder the nascent industry.
Neste in a declaration slashed the expected average comparable sales margin of its renewables unit to 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 expects 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 came from the production of sustainable aviation fuel, of which it is now expected to offer 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 adversely affected by a substantial decrease in (the) diesel price during the third quarter," Neste said in a declaration.
"At the exact same time, waste and residue feedstock costs have actually not reduced and renewable product market rate premiums have actually stayed weak," the company added.
Industry executives and analysts have actually said rapidly broadening Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports, while Shell and BP have they are stopping briefly growth strategies in Europe.
While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel price was to be expected, Inderes expert Petri Gostowski said.
Neste's share rate had actually reversed some losses by 1037 GMT however remained 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
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