Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop
Company makes 3rd cut to renewables company outlook this year
Reduces both margin and volume outlook
Weaker diesel market hits biofuel prices
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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 prices and likewise reduced its expected sales volumes, sending out the company’s share cost down 10%.
Neste said a drop in the price of regular diesel had impacted what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock stayed high.
A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has actually developed a supply excess of low-emissions biofuels, hammering earnings margins for refiners and threatening to restrain the nascent industry.
Neste in a declaration slashed the anticipated typical similar sales margin of its renewables unit 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 business now likewise expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had predicted given that the start of the year, it included.
A part of the volume cut originated from the production of sustainable air travel fuel, of which it is now expected to sell between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen previously, Neste stated.
« Renewable items’ sales costs have actually been negatively impacted by a significant decline in (the) diesel rate during the 3rd quarter, » Neste said in a declaration.
« At the very same time, waste and residue feedstock prices have actually not reduced and sustainable product market value premiums have stayed weak, » the company included.
Industry executives and experts have actually stated rapidly expanding Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually revealed they are stopping briefly growth plans in Europe.
While the cut in Neste’s assistance on sales volumes of sustainable aviation fuel came as a surprise, the negative influence on biodiesel margins from a lower diesel price was to be expected, Inderes expert Petri Gostowski said.
Neste’s share cost 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 and Jan Harvey)
