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 costs and also decreased its expected sales volumes, sending out the business's share price down 10%.

Neste said a drop in the price of routine diesel had impacted 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 actually developed a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to restrain the nascent industry.

Neste in a statement slashed the anticipated typical similar sales margin of its renewables system to between $360-$480 per tonne of biofuel, below $480-$580 per tonne seen in July and well 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 instead of the 4.4 million it had actually anticipated given 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, below between 500,000 and 700,000 tonnes seen formerly, Neste said.

"Renewable items' prices have actually been negatively affected by a substantial decline in (the) diesel rate during the 3rd quarter," Neste said in a declaration.

"At the very same time, waste and residue feedstock rates have actually not reduced and sustainable product market rate premiums have remained weak," the company added.

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

While the cut in Neste's assistance on sales volumes of sustainable air travel fuel came as a surprise, the negative effect on biodiesel margins from a lower diesel price was to be expected, Inderes expert Petri Gostowski stated.

cost 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