Company makes 3rd cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel costs

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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 business for the third time this year due to falling prices and likewise lowered its expected sales volumes, sending the company's share price down 10%.

Neste stated a drop in the price of routine diesel had 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 produced a supply excess of low-emissions biofuels, hammering profit margins for refiners and threatening to hinder the nascent market.

Neste in a declaration slashed the anticipated typical similar sales margin of its renewables system to in 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 in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had predicted because the start of the year, it included.

A part of the volume cut came from the production of sustainable aviation fuel, of which it is now expected to offer in between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen formerly, Neste stated.

"Renewable items' prices have actually been adversely impacted by a significant reduction in (the) diesel price during the third quarter," Neste stated in a declaration.

"At the very same time, waste and residue feedstock rates have not reduced and sustainable item market rate premiums have actually stayed weak," the company included.

Industry executives and experts have actually said rapidly broadening Chinese biodiesel producers are looking for new outlets in Asia for their exports, while Shell and BP have revealed they are pausing growth strategies in Europe.

While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable influence on biodiesel margins from a lower diesel rate was to be anticipated, Inderes analyst Petri Gostowski said.

Neste's share price 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