Company makes third cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel prices

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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 organization for the third time this year due to falling costs and also lowered its anticipated sales volumes, sending the business's share rate down 10%.

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

Neste in a statement slashed the expected average comparable sales margin of its renewables unit 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 expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had anticipated considering that the start of the year, it added.

A part of the volume cut came from the production of sustainable aviation fuel, of which it is now anticipated to offer between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen formerly, Neste said.

"Renewable products' prices have been negatively affected by a significant reduction in (the) diesel cost throughout the third quarter," Neste said in a statement.

"At the same time, waste and residue feedstock prices have actually not decreased and sustainable product market price premiums have actually remained weak," the business 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 actually revealed they are stopping briefly growth plans in Europe.

While the cut in Neste's assistance on sales volumes of sustainable aviation fuel came as a surprise, the negative effect on biodiesel margins from a lower diesel rate was to be expected, Inderes expert Petri Gostowski said.

Neste's share cost 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)