Company makes 3rd cut to renewables company outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits biofuel rates

(Adds analyst, 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 business for the 3rd time this year due to falling costs and likewise decreased its expected sales volumes, sending out the business's share rate down 10%.

Neste said a drop in the price 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 remained high.

A rush by U.S. fuel makers to recalibrate their plants to produce renewable diesel has created a supply glut of low-emissions biofuels, hammering profit margins for refiners and threatening to restrain the nascent industry.

Neste in a declaration slashed the expected average equivalent sales margin of its renewables system to 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 also anticipates renewables-based sales volumes in 2024 to be about 3.9 million tonnes rather of the 4.4 million it had anticipated 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 expected 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 actually been negatively impacted by a significant decline in (the) diesel price during the 3rd quarter," Neste stated in a declaration.

"At the same time, waste and residue feedstock costs have actually not decreased and sustainable product market rate premiums have actually remained weak," the business included.

Industry executives and experts have actually stated rapidly broadening Chinese biodiesel are looking for brand-new outlets in Asia for their exports, while Shell and BP have announced they are pausing expansion plans in Europe.

While the cut in Neste's guidance on sales volumes of sustainable air travel fuel came as a surprise, the negative impact on biodiesel margins from a lower diesel cost was to be expected, Inderes expert Petri Gostowski stated.

Neste's share rate had actually reversed some losses by 1037 GMT but 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)