Mission Agroenergy Ltd

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  • Founded Date May 14, 1914
  • Sectors Office
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Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop

Company makes third cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel costs

(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 business for the 3rd time this year due to falling costs and likewise decreased its expected sales volumes, sending the company’s share rate down 10%.

Neste said a drop in the rate of regular diesel had actually impacted what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and remained high.

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

Neste in a statement slashed the anticipated typical equivalent sales margin of its renewables unit to 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 company now also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had forecasted because the start of the year, it added.

A part of the volume cut came from the production of sustainable aviation fuel, of which it is now anticipated 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 products’ list prices have actually been negatively affected by a significant decrease in (the) diesel rate throughout the 3rd quarter,” Neste stated in a declaration.

“At the very same time, waste and residue feedstock prices have not reduced and sustainable item market cost premiums have remained weak,” the business included.

Industry executives and experts have said quickly expanding Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have actually revealed they are pausing expansion plans in Europe.

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

Neste’s share cost 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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