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Company makes 3rd cut to renewables company outlook this year


Reduces both margin and volume outlook


Weaker diesel market hits biofuel prices


(Adds analyst, background, information 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 3rd time this year due to falling rates and also lowered its expected sales volumes, sending the company's share price down 10%.


Neste said a drop in the cost of regular diesel had affected what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock remained high.


A rush by U.S. fuel makers to recalibrate their plants to produce eco-friendly diesel has produced a supply glut of low-emissions biofuels, hammering profit margins for refiners and threatening to hinder the nascent market.


Neste in a declaration slashed the expected average equivalent sales margin of its renewables unit to in between $360-$480 per tonne of biofuel, down from $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 instead of the 4.4 million it had actually anticipated 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 anticipated to offer in between 350,000-550,000 tonnes this year, below in between 500,000 and 700,000 tonnes seen previously, Neste said.


"Renewable items' sales rates have been adversely affected by a significant decline in (the) diesel rate throughout the 3rd quarter," Neste stated in a statement.


"At the same time, waste and residue feedstock prices have not reduced and renewable item market value premiums have actually stayed weak," the business added.


Industry executives and experts have said quickly broadening Chinese biodiesel producers are looking for new outlets in Asia for their exports, while Shell and BP have announced 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 unfavorable effect on biodiesel margins 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 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)