Company makes third cut to renewables service 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 decreased its anticipated sales volumes, sending the company's share cost down 10%.

Neste stated a drop in the price of routine 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 sustainable diesel has developed a supply excess of low-emissions biofuels, hammering earnings margins for refiners and threatening to hinder the nascent market.

Neste in a declaration slashed the anticipated average comparable sales margin of its renewables system to in 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 likewise expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually predicted given that the start of the year, it included.

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

"Renewable products' prices have been adversely affected by a substantial decrease in (the) diesel price during the 3rd quarter," Neste said in a declaration.

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

Industry executives and experts have stated quickly expanding Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually revealed they are stopping briefly expansion strategies 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 from a lower diesel price was to be expected, Inderes expert Petri Gostowski said.

Neste's share rate had actually 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