Company makes 3rd cut to renewables business 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 business for the third time this year due to falling prices and likewise lowered its expected sales volumes, sending out the business's share rate down 10%.

Neste stated a drop in the rate of regular diesel had actually 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 actually developed a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to hinder the nascent industry.

Neste in a statement slashed the expected typical comparable 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 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 forecasted because 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, down from in between 500,000 and 700,000 tonnes seen previously, Neste said.

"Renewable products' list prices have actually been negatively impacted by a significant decline in (the) diesel cost throughout the 3rd quarter," Neste said in a statement.

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

Industry executives and analysts have actually stated rapidly broadening Chinese biodiesel manufacturers are looking for in Asia for their exports, while Shell and BP have actually revealed 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 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