Company makes third cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits biofuel costs

(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 third time this year due to falling rates and also lowered its anticipated sales volumes, sending the company'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 expenses 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 glut of low-emissions biofuels, hammering profit margins for refiners and threatening to impede the nascent industry.

Neste in a declaration slashed the expected typical comparable sales margin of its renewables system to in 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 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 actually anticipated 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 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' prices have actually been negatively affected by a considerable reduction in (the) diesel rate throughout the 3rd quarter," Neste said in a statement.

"At the very same time, waste and residue feedstock prices have actually not decreased and sustainable item market value premiums have actually stayed weak," the company included.

Industry executives and analysts have actually stated rapidly broadening Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports, while Shell and BP have revealed they are pausing expansion plans in Europe.

While the cut in Neste's assistance on sales volumes of sustainable air travel 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 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; Editing by Terje Solsvik and Jan Harvey)