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

Neste said a drop in the cost 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 remained high.

A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has actually produced a supply glut of low-emissions biofuels, hammering earnings margins for refiners and threatening to hinder the nascent industry.

Neste in a declaration slashed the expected average similar sales margin of its renewables system 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 likewise anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually forecasted considering that the start of the year, it included.

A part of the volume cut originated from the production of sustainable air travel fuel, of which it is now expected to offer between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen previously, Neste said.

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

"At the exact same time, waste and residue feedstock prices have not reduced and renewable product market rate premiums have stayed weak," the company included.

Industry executives and analysts have said quickly broadening Chinese biodiesel manufacturers are looking for brand-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 guidance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable influence on biodiesel margins from a lower diesel price was to be anticipated, Inderes analyst Petri Gostowski stated.

Neste's share price had reversed some losses by 1037 GMT however 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)