Company makes third cut to renewables business outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel prices

(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 3rd time this year due to falling costs and likewise lowered its anticipated sales volumes, sending the business’s share cost down 10%.

Neste stated a drop in the price of routine diesel had impacted 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 sustainable diesel has actually created a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to impede the nascent industry.

Neste in a statement slashed the expected average equivalent sales margin of its renewables unit to in between $360-$480 per tonne of biofuel, below $480-$580 per tonne seen in July and well listed below the $600-$800 seen in February.

The business now also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had predicted since the start of the year, it included.

A part of the volume cut originated 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, down from between 500,000 and 700,000 tonnes seen formerly, Neste said.

“Renewable items’ list prices have been negatively impacted by a substantial reduction in (the) diesel rate during the 3rd quarter,” Neste said in a declaration.

“At the same time, waste and residue feedstock rates have actually not reduced and renewable product market value premiums have stayed weak,” the business included.

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

While the cut in Neste’s assistance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable effect on from a lower diesel price was to be expected, Inderes expert Petri Gostowski stated.

Neste’s share cost had reversed some losses by 1037 GMT however remained down 5.8% on the day and 48% lower year-to-date. (Reporting by Elviira Luoma, Essi Lehto and Boleslaw Lasocki