Company makes 3rd cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits biofuel prices

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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 3rd time this year due to falling rates and likewise decreased its expected sales volumes, sending the company's share price down 10%.

Neste said a drop in the cost of routine diesel had affected what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock remained high.

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

Neste in a declaration slashed the anticipated average similar 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 anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually anticipated since 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 expected to sell in between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen formerly, Neste stated.

"Renewable items' sales costs have been negatively affected by a significant decline in (the) diesel rate throughout the third quarter," Neste said in a statement.

"At the very same time, waste and residue feedstock rates have not decreased and renewable product market value premiums have remained weak," the business added.

Industry executives and analysts have actually said quickly expanding Chinese biodiesel producers are seeking new outlets in Asia for their exports, while Shell and BP have actually announced they are pausing growth strategies in Europe.

While the cut in Neste's guidance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable impact on biodiesel margins from a lower diesel cost was to be anticipated, Inderes analyst 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)