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

Neste said a drop in the rate of regular diesel had affected 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 renewable diesel has produced a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to restrain the nascent industry.

Neste in a declaration slashed the anticipated average similar sales margin of its renewables unit 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 company now also expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually forecasted considering that 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 anticipated to sell between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste said.

"Renewable products' list prices have been negatively affected by a significant decrease in (the) diesel rate throughout the 3rd quarter," Neste said in a declaration.

"At the same time, waste and residue feedstock prices have actually not decreased and renewable product market value premiums have actually remained weak," the business added.

Industry executives and have actually said rapidly expanding Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports, while Shell and BP have announced they are pausing expansion 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 stated.

Neste's share rate 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