Company makes third cut to renewables service 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 organization for the third time this year due to falling prices and likewise reduced its expected sales volumes, sending out the company's share price down 10%.

Neste stated a drop in the cost of regular diesel had actually affected what it can charge for the 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 eco-friendly diesel has actually created a supply excess of low-emissions biofuels, hammering profit margins for refiners and threatening to hamper the nascent market.

Neste in a declaration slashed the anticipated typical similar sales margin of its renewables unit to in 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 also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually 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 offer between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste said.

"Renewable items' list prices have actually been adversely affected by a significant decrease in (the) diesel rate throughout the third quarter," Neste said in a declaration.

"At the exact same time, waste and residue feedstock rates have not decreased and renewable item market rate premiums have actually stayed weak," the business included.

Industry executives and experts have actually stated quickly expanding Chinese biodiesel producers are seeking new outlets in Asia for their exports, while Shell and BP have announced they are pausing growth plans in Europe.

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

Neste's share cost had actually 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