Company makes 3rd cut to renewables organization 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 prices and also reduced its anticipated sales volumes, sending the business’s share rate down 10%.

Neste stated a drop in the rate 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 remained high.

A rush by U.S. fuel makers to recalibrate their plants to produce sustainable diesel has actually developed a supply excess of low-emissions biofuels, hammering profit margins for refiners and threatening to restrain the nascent industry.

Neste in a declaration slashed the expected typical comparable sales margin of its renewables system 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 also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually predicted given that the start of the year, it added.

A part of the volume cut originated from the production of sustainable aviation 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 products’ prices have been adversely impacted by a substantial reduction in (the) diesel rate throughout the third quarter,” Neste stated in a declaration.

"At the same time, waste and residue feedstock prices have not reduced and eco-friendly product market value premiums have stayed weak,” the business added.

Industry executives and analysts have said quickly broadening Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have revealed they are pausing growth plans in Europe.

While the cut in Neste’s guidance on sales volumes of sustainable aviation fuel came as a surprise, the negative influence on biodiesel margins from a lower diesel rate was to be expected, Inderes analyst Petri Gostowski stated.

Neste’s share cost had reversed some losses by 1037 GMT but stayed down 5.8% on the day and 48% lower year-to-date. (Reporting by Elviira Luoma, Essi Lehto and Boleslaw Lasocki