Company makes third cut to renewables company 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 3rd time this year due to falling costs and likewise reduced its anticipated sales volumes, sending the business's share rate down 10%.

Neste said a drop in the price of regular diesel had impacted 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 renewable diesel has produced a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to restrain the nascent market.

Neste in a statement slashed the anticipated typical 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 below the $600-$800 seen in February.

The company now likewise anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually predicted since the start of the year, it included.

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, below between 500,000 and 700,000 tonnes seen previously, Neste stated.

"Renewable items' prices have been adversely affected by a substantial reduction in (the) diesel cost throughout the third quarter," Neste stated in a statement.

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

Industry executives and analysts 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 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 negative impact on biodiesel margins from a lower diesel cost was to be expected, Inderes expert Petri Gostowski said.

Neste's share cost had actually 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; Editing by Terje Solsvik and Jan Harvey)