Company makes 3rd cut to renewables company outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits 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 company for the 3rd time this year due to falling rates and likewise lowered its anticipated sales volumes, sending the business's share rate down 10%.

Neste said a drop in the price of regular 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 sustainable diesel has developed a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent market.

Neste in a statement slashed the expected typical similar sales margin of its renewables unit 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 company now also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually predicted given that 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 expected 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 products' sales costs have been negatively impacted by a substantial reduction in (the) diesel cost throughout the third quarter," Neste stated in a declaration.

"At the very same time, waste and residue feedstock costs have actually not decreased and eco-friendly product market value premiums have actually remained weak," the company added.

Industry executives and experts have actually said rapidly expanding Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually revealed they are stopping briefly 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 price was to be expected, Inderes expert Petri Gostowski said.

Neste's share cost had reversed some losses by 1037 GMT but stayed down 5.8% on the day and 48% lower year-to-date. (Reporting by Elviira Luoma, Essi Lehto and Boleslaw Lasocki