Refiner Neste Warns Of Weaker Biofuel Outlook Shares Drop

Company makes 3rd cut to renewables business outlook this year


Reduces both margin and volume outlook


Weaker diesel market hits biofuel rates


(Adds expert, 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 3rd time this year due to falling rates and also reduced its expected sales volumes, sending the company's share price down 10%.


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


Neste in a statement slashed the expected typical similar sales margin of its renewables system 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 company now likewise anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had predicted since 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 expected to offer between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen formerly, Neste stated.


"Renewable products' prices have actually been negatively impacted by a substantial decrease in (the) diesel cost during the 3rd quarter," Neste said in a statement.


"At the exact same time, waste and residue feedstock costs have actually not reduced and sustainable product market value premiums have stayed weak," the company included.


Industry executives and experts have actually said quickly expanding Chinese are looking for new outlets in Asia for their exports, while Shell and BP have actually announced they are stopping briefly expansion plans in Europe.


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


Neste's share rate had 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; Editing by Terje Solsvik and Jan Harvey)