Refiner Neste Warns Of Weaker Biofuel Outlook Shares Drop

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Company makes third cut to renewables organization 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 costs and likewise decreased its expected sales volumes, sending the business's share rate down 10%.


Neste said a drop in the price of routine diesel had actually 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 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 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 anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually anticipated 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 in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen previously, Neste stated.


"Renewable items' prices have been adversely affected by a significant decrease in (the) diesel rate during the 3rd quarter," Neste stated in a declaration.


"At the exact same time, waste and residue feedstock rates have not decreased and eco-friendly product market value premiums have stayed weak," the business included.


Industry executives and analysts have stated quickly expanding Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have actually announced they are pausing expansion strategies in Europe.


While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable influence on biodiesel margins from a lower diesel cost was to be expected, Inderes analyst Petri Gostowski said.


Neste's share price had actually reversed some losses by 1037 GMT however 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)

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