Company makes 3rd cut to renewables company outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel rates

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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 third time this year due to falling prices and likewise reduced its anticipated sales volumes, sending out the business's share rate down 10%.

Neste said a drop in the rate 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 stayed high.

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

Neste in a statement slashed the anticipated average 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 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 anticipated given that the start of the year, it added.

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

"Renewable items' prices have been adversely affected by a substantial reduction in (the) diesel price during the 3rd quarter," Neste stated in a declaration.

"At the exact same time, waste and residue feedstock costs have actually not decreased and renewable product market rate premiums have actually stayed weak," the company added.

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

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

Neste's share cost had actually reversed some losses by 1037 GMT but remained 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)