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

Neste stated a drop in the price of routine diesel had impacted 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 eco-friendly diesel has actually produced a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent industry.

Neste in a declaration slashed the expected 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 also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had predicted since the start of the year, it included.

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

"Renewable items' sales costs have been adversely impacted by a substantial reduction in (the) diesel price throughout the third quarter," Neste said in a statement.

"At the same time, waste and residue feedstock rates have actually not decreased and eco-friendly item market cost premiums have stayed weak," the company added.

Industry executives and analysts have said rapidly expanding Chinese biodiesel producers are seeking brand-new outlets in Asia for their exports, while Shell and BP have actually revealed they are pausing growth plans in Europe.

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

Neste's share cost had 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)