Company makes 3rd cut to renewables business 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 organization for the third time this year due to falling rates and likewise reduced its anticipated sales volumes, sending out the business's share cost down 10%.

Neste stated a drop in the price of regular diesel had affected what it can charge for the it makes in Europe and Singapore, while input expenses for waste and residue feedstock stayed high.

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

Neste in a statement slashed the anticipated typical similar 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 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 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 air travel fuel, of which it is now anticipated to sell in between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen formerly, Neste said.

"Renewable items' list prices have actually been negatively affected by a considerable reduction in (the) diesel rate during the third quarter," Neste stated in a statement.

"At the same time, waste and residue feedstock costs have not decreased and sustainable item market value premiums have actually remained weak," the company added.

Industry executives and experts have actually stated rapidly broadening Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports, while Shell and BP have actually 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 price was to be expected, Inderes analyst Petri Gostowski said.

Neste's share cost had 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)