Company makes 3rd cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes 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 service for the third time this year due to falling costs and also decreased its expected sales volumes, sending the business's share cost down 10%.

Neste said a drop in the cost of regular diesel had actually impacted what it can charge for the biofuel it makes in Europe and Singapore, while input costs 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 excess of low-emissions biofuels, hammering profit margins for refiners and threatening to hamper the nascent market.

Neste in a declaration slashed the expected typical similar sales margin of its renewables unit to 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 sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually predicted because 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 items' prices have been negatively affected by a substantial decrease in (the) diesel price during the third quarter," Neste stated in a statement.

"At the same time, waste and residue feedstock prices have actually not reduced and sustainable product market rate premiums have stayed weak," the business added.

Industry executives and analysts have stated quickly expanding Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports, while Shell and BP have revealed they are pausing growth strategies in Europe.

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

Neste's share rate had actually 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)