Company makes 3rd 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 rates and likewise decreased its anticipated sales volumes, sending out the business's share rate down 10%.

Neste said a drop in the rate of regular diesel had impacted what it can charge for the biofuel it makes in Europe and Singapore, while input expenses 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 developed a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to impede the nascent industry.

Neste in a statement slashed the expected 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 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 actually anticipated because the start of the year, it included.

A part of the volume cut came from the production of sustainable air travel fuel, of which it is now anticipated to sell between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste stated.

"Renewable products' sales rates have actually been negatively affected by a substantial decrease in (the) diesel rate throughout the third quarter," Neste said in a declaration.

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

Industry executives and experts have actually said quickly broadening Chinese biodiesel manufacturers 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 unfavorable influence on biodiesel margins from a lower diesel cost was to be expected, Inderes analyst Petri Gostowski said.

Neste's share cost had actually reversed some losses by 1037 GMT but stayed 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)