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

Neste said 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 stayed high.

A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has developed a supply excess of low-emissions biofuels, hammering profit margins for refiners and threatening to restrain the nascent market.

Neste in a statement 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 expects renewables-based sales volumes 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 added.

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

"Renewable products' prices have been adversely affected by a substantial decline in (the) diesel price during the third quarter," Neste stated in a declaration.

"At the exact same time, waste and residue feedstock rates have not decreased and renewable item market cost premiums have stayed weak," the business added.

Industry executives and experts have actually said rapidly expanding Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have actually revealed they are pausing expansion strategies 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 rate was to be anticipated, Inderes analyst 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