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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 prices


(Adds expert, background, information 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 business for the third time this year due to falling prices and also lowered its anticipated sales volumes, sending out the company's share rate down 10%.


Neste stated a drop in the rate of routine 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 eco-friendly diesel has actually created a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to restrain the nascent market.


Neste in a declaration slashed the expected average equivalent sales margin of its renewables system to between $360-$480 per tonne of biofuel, below $480-$580 per tonne seen in July and well 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 forecasted given that the start of the year, it added.


A part of the volume cut originated from the production of sustainable air travel fuel, of which it is now to offer 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 actually been adversely affected by a considerable decline in (the) diesel cost throughout the 3rd quarter," Neste said in a statement.


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


Industry executives and experts have actually stated rapidly broadening Chinese biodiesel manufacturers are looking for new outlets in Asia for their exports, while Shell and BP have announced they are pausing expansion plans in Europe.


While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the negative effect on biodiesel margins from a lower diesel price was to be expected, Inderes expert Petri Gostowski stated.


Neste's share rate 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)