Company makes third cut to renewables company 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 organization for the third time this year due to falling prices and likewise lowered its anticipated sales volumes, sending the company’s share cost down 10%.

Neste stated a drop in the cost of routine diesel had affected what it can charge for the biofuel it makes in Europe and Singapore, while for waste and residue feedstock stayed high.

A rush by U.S. fuel makers to recalibrate their plants to produce eco-friendly diesel has actually developed a supply excess of low-emissions biofuels, hammering earnings margins for refiners and threatening to hinder the nascent industry.

Neste in a declaration slashed the anticipated average equivalent 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 also expects 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 came from the production of sustainable aviation fuel, of which it is now anticipated to offer between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen formerly, Neste stated.

“Renewable products’ prices have actually been negatively affected by a significant decrease in (the) diesel rate throughout the 3rd quarter,” Neste said in a declaration.

“At the exact same time, waste and residue feedstock prices have actually not reduced and eco-friendly product market price premiums have actually remained weak,” the company included.

Industry executives and analysts have said rapidly expanding Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports, while Shell and BP have revealed they are stopping briefly expansion plans in Europe.

While the cut in Neste’s guidance on sales volumes of sustainable aviation fuel came as a surprise, the negative influence on biodiesel margins from a lower diesel price was to be anticipated, Inderes expert Petri Gostowski said.

Neste’s share cost 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