Company makes 3rd cut to renewables service outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes biofuel prices

(Adds expert, 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 service for the third time this year due to falling costs and also decreased its anticipated sales volumes, sending the company's share rate down 10%.

Neste said a drop in the cost of routine diesel had 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 actually developed a supply excess of low-emissions biofuels, hammering revenue margins for refiners and threatening to restrain the nascent market.

Neste in a declaration slashed the anticipated typical equivalent sales margin of its renewables unit 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 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 anticipated because the start of the year, it included.

A part of the volume cut originated from the production of sustainable aviation fuel, of which it is now expected to offer in between 350,000-550,000 tonnes this year, down from in between 500,000 and 700,000 tonnes seen formerly, Neste stated.

"Renewable products' prices have been negatively affected by a considerable decline in (the) diesel rate during the 3rd quarter," Neste said in a statement.

"At the exact same time, waste and residue feedstock rates have actually not reduced and renewable item market cost premiums have actually remained weak," the company included.

Industry executives and experts have stated quickly expanding Chinese biodiesel manufacturers are looking for new outlets in Asia for their exports, while Shell and BP have announced they are pausing growth strategies in Europe.

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

Neste's share cost had actually 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