Company makes third cut to renewables business outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel rates

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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 3rd time this year due to falling rates and likewise decreased its anticipated sales volumes, sending the business's share cost down 10%.

Neste said a drop in the rate of regular diesel had 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 actually created a supply glut of low-emissions biofuels, hammering earnings margins for refiners and to hinder the nascent market.

Neste in a statement slashed the expected typical 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 company now likewise anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had predicted 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 expected to offer between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen previously, Neste said.

"Renewable items' prices have actually been negatively affected by a substantial decline in (the) diesel rate during the 3rd quarter," Neste stated in a declaration.

"At the exact same time, waste and residue feedstock costs have actually not reduced and sustainable product market cost premiums have stayed weak," the company included.

Industry executives and analysts have actually stated rapidly expanding Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports, while Shell and BP have actually announced they are pausing expansion plans in Europe.

While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel rate was to be anticipated, Inderes analyst Petri Gostowski stated.

Neste's share cost 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