
M2 Capital Sdn. Bhd
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Founded Date October 5, 2004
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Company Description
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 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 company for the third time this year due to falling costs and likewise reduced its anticipated sales volumes, sending out the business’s share price down 10%.
Neste said a drop in the price of regular diesel had actually 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 eco-friendly diesel has created a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to impede the nascent market.
Neste in a declaration slashed the expected average equivalent 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 company now likewise expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually anticipated considering 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 anticipated to sell between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen previously, Neste stated.
“Renewable items’ sales prices have been adversely impacted by a significant decline in (the) diesel cost throughout the 3rd quarter,” Neste said in a declaration.
“At the very same time, waste and residue feedstock rates have actually not reduced and eco-friendly product market price premiums have stayed weak,” the business included.
Industry executives and analysts have actually stated quickly broadening Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports, while Shell and BP have announced they are stopping briefly expansion strategies in Europe.
While the cut in Neste’s guidance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel cost was to be anticipated, Inderes analyst Petri Gostowski stated.
Neste’s share cost had reversed some losses by 1037 GMT but remained down 5.8% on the day and 48% lower year-to-date. (Reporting by Elviira Luoma, and Boleslaw Lasocki; Editing by Terje Solsvik and Jan Harvey)