Company makes 3rd cut to renewables business outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits biofuel rates

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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 company for the third time this year due to falling rates and likewise reduced its expected sales volumes, sending out the business’s share price down 10%.

Neste said a drop in the price of had actually 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 created a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent market.

Neste in a declaration slashed the anticipated average comparable sales margin of its renewables unit to in between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well listed below the $600-$800 seen in February.

The company now likewise expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had predicted considering 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 anticipated to sell between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen formerly, Neste said.

“Renewable items’ list prices have been adversely affected by a considerable reduction in (the) diesel cost throughout the 3rd quarter,” Neste stated in a declaration.

“At the exact same time, waste and residue feedstock costs have not reduced and renewable item market value premiums have actually remained weak,” the business added.

Industry executives and analysts have actually said quickly broadening Chinese biodiesel producers are looking for 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 air travel fuel came as a surprise, the negative influence on biodiesel margins from a lower diesel price was to be anticipated, Inderes expert Petri Gostowski said.

Neste’s share price 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