Company makes 3rd cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits biofuel costs

(Adds expert, background, detail in paragraphs 2-3, 9-11)

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 3rd time this year due to falling prices and also reduced its anticipated sales volumes, sending the business’s share price down 10%.

Neste stated 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 expenses for waste and residue feedstock stayed 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 earnings margins for refiners and threatening to impede the nascent industry.

Neste in a declaration slashed the expected typical similar 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 below the $600-$800 seen in February.

The business now also expects 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 aviation fuel, of which it is now anticipated to offer in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen previously, Neste said.

“Renewable products’ prices have actually been negatively impacted by a considerable reduction in (the) diesel rate throughout the third quarter,” Neste stated in a declaration.

“At the same time, waste and residue feedstock costs have not decreased and sustainable product market cost premiums have remained weak,” the company added.

Industry executives and analysts have said quickly expanding Chinese biodiesel producers are looking for 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 aviation fuel came as a surprise, the negative influence on biodiesel margins from a lower diesel rate was to be expected, Inderes expert 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