Company makes third cut to renewables organization outlook this year

Reduces both margin and volume outlook

Weaker diesel market hits biofuel rates

(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 rates and also reduced its expected sales volumes, sending the business's share rate down 10%.

Neste said a drop in the rate of regular diesel had 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 sustainable diesel has produced a supply glut of low-emissions biofuels, hammering profit margins for refiners and threatening to impede the nascent market.

Neste in a declaration slashed the expected typical comparable 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 expects renewables-based sales volumes in 2024 to be about 3.9 million tonnes instead of the 4.4 million it had actually predicted given that 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 expected to offer between 350,000-550,000 tonnes this year, below between 500,000 and 700,000 tonnes seen previously, Neste said.

"Renewable items' sales costs have been adversely affected by a significant decrease in (the) diesel price throughout the third quarter," Neste said in a declaration.

"At the very same time, waste and residue feedstock costs have not reduced and renewable item market value premiums have remained weak," the business added.

Industry executives and experts have actually said rapidly expanding Chinese biodiesel producers are seeking brand-new outlets in Asia for their exports, while Shell and BP have actually announced they are stopping briefly expansion strategies in Europe.

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

Neste's share cost 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)