Company makes third cut to renewables organization outlook this year

Reduces both margin and volume outlook

Weaker diesel market strikes 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 organization for the third time this year due to falling rates and also reduced its expected sales volumes, sending out the business's share rate down 10%.

Neste said a drop in the price of routine diesel had affected what it can charge for the biofuel it makes in Europe and Singapore, while input costs for waste and residue feedstock stayed high.

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

Neste in a statement slashed the anticipated average comparable sales margin of its renewables system to in between $360-$480 per tonne of biofuel, down from $480-$580 per tonne seen in July and well listed 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 predicted 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 anticipated to sell between 350,000-550,000 tonnes this year, down from between 500,000 and 700,000 tonnes seen previously, Neste stated.

"Renewable products' sales prices have been adversely impacted by a considerable reduction in (the) diesel rate during the third quarter," Neste stated in a statement.

"At the very same time, waste and residue feedstock rates have actually not reduced and eco-friendly item market price premiums have stayed weak," the business added.

Industry executives and experts have stated rapidly broadening Chinese biodiesel producers are looking for 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 assistance on sales volumes of sustainable aviation fuel came as a surprise, the unfavorable effect on biodiesel margins from a lower diesel rate was to be anticipated, Inderes expert Petri Gostowski stated.

Neste's share price had 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)