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Refiner Neste Warns of Weaker Biofuel Outlook, Shares Drop

Company makes third cut to outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits biofuel rates

(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 company for the 3rd time this year due to falling prices and also decreased its anticipated sales volumes, sending out the business's share price down 10%.

Neste stated a drop in the cost of routine diesel had actually affected 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 renewable diesel has produced a supply glut of low-emissions biofuels, hammering revenue margins for refiners and threatening to impede the nascent industry.

Neste in a declaration slashed the anticipated typical similar sales margin of its renewables system to between $360-$480 per tonne of biofuel, below $480-$580 per tonne seen in July and well below the $600-$800 seen in February.

The company now also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had actually predicted since 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 between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen previously, Neste stated.

"Renewable products' prices have been negatively impacted by a substantial decrease in (the) diesel cost throughout the 3rd quarter," Neste stated in a statement.

"At the very same time, waste and residue feedstock rates have actually not decreased and renewable product market value premiums have actually remained weak," the company added.

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

While the cut in Neste's assistance on sales volumes of sustainable aviation fuel came as a surprise, the negative impact on biodiesel margins from a lower diesel price was to be expected, Inderes analyst Petri Gostowski stated.

Neste's share price 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)