Refiner Neste Warns Of Weaker Biofuel Outlook Shares Drop

Company makes 3rd cut to renewables organization outlook this year


Reduces both margin and volume outlook


Weaker diesel market strikes biofuel costs


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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 organization for the 3rd time this year due to falling rates and also lowered its expected sales volumes, sending out the company's share rate 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 created a supply excess of low-emissions biofuels, hammering profit margins for refiners and threatening to hamper the nascent industry.


Neste in a statement slashed the expected typical 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 business now likewise anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had predicted because the start of the year, it included.


A part of the volume cut originated from the production of sustainable aviation fuel, of which it is now anticipated to sell in between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste stated.


"Renewable products' prices have been negatively impacted by a substantial decline in (the) diesel price throughout the third quarter," Neste stated in a statement.


"At the very same time, waste and residue feedstock rates have actually not reduced and renewable product market cost premiums have stayed weak," the company added.


Industry executives and experts have actually said quickly expanding Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have announced they are pausing growth plans 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 cost was to be expected, Inderes expert Petri Gostowski said.


Neste's share cost had reversed some losses by 1037 GMT however stayed down 5.8% on the day and 48% lower year-to-date. (Reporting by Luoma, Essi Lehto and Boleslaw Lasocki; Editing by Terje Solsvik and Jan Harvey)