Neste's Singapore diesel line shuts over equipment failure, raising global supply disruption concerns

A production line at Neste's Singapore biorefinery, dedicated to renewable diesel for the US market, has been temporarily shut due to technical issues, five biofuel traders said Oct. 17.

The unplanned stoppage occurred during the plant's restart after scheduled maintenance work. The planned outages at its Singapore refinery during a six-week turnaround in the third quarter and a four-week maintenance shutdown in Rotterdam were expected to limit renewables sales, making additional downtime a key downside risk.

The affected production line produces renewable diesel that meets requirements set for the US market.

The refinery's sustainable aviation fuel production at the new line remains unaffected.

According to sources, Neste has notified its US customers of the potential impact on their deliveries for the remainder of 2024.

The incident occurred during the last quarter in which imported biofuels can benefit from the US blender tax credit, which means Neste could miss out on sales during this period.

The refinery is one of the major facilities of the world's largest producer of renewable diesel and jet fuel.

Neste confirmed later to S&P Global Commodity Insights that repair work has commenced to address the technical issues and bring the line back online.

"After the third-quarter planned maintenance shutdown and related start-up in October, Singapore’s first production line encountered an unforeseen equipment failure that led to the shutdown of the production line at the refinery. The impacted production line produces renewable diesel that meets the requirements set for the US market. Repair work has commenced. Neste’s US customers have been notified of the impact on their deliveries for the remainder of 2024,” the company said.

Neste said that its renewable diesel deliveries to customers outside of the US continue as planned, as the company is also producing renewable diesel at its refineries in Finland and the Netherlands, as well as through a joint operation in California.

In its Q2 report released July, Neste forecast its global SAF sales volumes would total 500,000-700,000 mt, revising down its upper band forecast by 30% but maintaining optimistic growth outlooks for Q3 and Q4.

This was led by a fall in diesel prices which has severely impacted sales prices, even as costs for waste and residue feedstocks have stayed stable and market premiums for renewable products have remained weak,

The total sales volume for the Renewable Products business is now expected to reach around 3.9 million mt with a variation of 5%, a decrease from the previous forecast of 4.4 million mt.

Neste now forecasts the average renewable comparable sales margin to be around $360-$480/mt, significantly lower than the prior outlook of $480-$580/mt.

Platts, part of Commodity Insights, assessed renewable diesel cost of production (PFAD) at $1,582.80/mt on Oct. 17, down $15.18 from the previous assessment.