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

Neste said a drop in the cost 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 actually produced a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to hamper the nascent market.

Neste in a declaration slashed the anticipated typical comparable sales margin of its renewables system to 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 expects renewables-based in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually anticipated considering that the start of the year, it included.

A part of the volume cut originated from the production of sustainable aviation 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' list prices have been negatively impacted by a substantial reduction in (the) diesel price throughout the 3rd quarter," Neste said in a declaration.

"At the very same time, waste and residue feedstock costs have not reduced and sustainable item market value premiums have actually stayed weak," the business added.

Industry executives and experts have said rapidly expanding Chinese biodiesel producers are looking for new outlets in Asia for their exports, while Shell and BP have revealed they are stopping briefly 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 influence on biodiesel margins from a lower diesel price was to be expected, Inderes analyst Petri Gostowski stated.

Neste's share rate had 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