Company makes third cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits 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 3rd time this year due to falling costs and also decreased its expected sales volumes, sending the business's share cost down 10%.

Neste stated a drop in the price of routine diesel had actually 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 sustainable diesel has actually developed a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to hinder the nascent market.

Neste in a declaration slashed the anticipated typical equivalent sales margin of its renewables system to in between $360-$480 per tonne of biofuel, below $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 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 air travel fuel, of which it is now anticipated to offer in between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen formerly, Neste stated.

"Renewable items' prices have actually been adversely impacted by a significant decrease in (the) diesel price throughout the third quarter," Neste said in a statement.

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

Industry executives and analysts have actually said quickly broadening Chinese biodiesel producers are looking for new outlets in Asia for their exports, while Shell and BP have actually revealed they are stopping briefly growth strategies in Europe.

While the cut in on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel rate was to be anticipated, Inderes analyst Petri Gostowski stated.

Neste's share price 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