Having a better understanding of the DEF Industry and the internal and external factors that influence its pricing could assist you in making key decisions in your company. That is why in this blog titled 2017 Diesel Exhaust Fluid Forecast, I will outline some of these factors and general information in hopes that this information is useful for our readers. We will discuss topics such as DEF pricing, the DEF industry evolution, new DEF equipment solutions, other emission controlling technology and finally DEF usage in North America.
In this first part of the 2017 Diesel Exhaust Fluid Forecast, we will discuss DEF prices. Diesel Exhaust Fluid is composed of 32.5% urea and 67.5% DI Water. Urea is a commodity that is mainly used in the world as a fertilizer and is traded internationally as a commodity. In the case of DEF, we utilize an automotive grade Urea that is more a specialty than fertilizer urea but also is considered a commodity. Fertilizer Urea prices fluctuate based on the fertilizing seasons. In most countries of the northern hemisphere most crops are prepared and planted at the beginning of the year, thus, Urea is usually at a higher price then. When most of the crops are harvested and during the winter season, then the use of Urea drops and so does the price.
*Prices of automotive grade urea began low in 2016, therefore lowering the price of DEF. A brief rise in prices lasted only a couple of months. By the end of summer 2016, it plummeted to the lowest price ever seen since 2007. Fast forward to February 2017, prices of urea are a bit higher than the same time last year. We are already seeing a greater demand for DEF this year compared to last year. Add to this that fertilizer Urea is also rising, then DEF prices should follow. The tendency is on the upside.
Transliquid Technologies follows the DEF market very closely and adjusts its pricing up or down monthly. We do this in order to give our customers the leading edge when it comes to being competitive.
What is interesting for us, is the fact that even though the market of DEF varies monthly we continue to see the prices at the pump fairly stable and high. The large truck stop chains justify these high prices on the fact that they make large capital investments to provide DEF at the pump, but I want to throw this question out there, how long is this supposed to last? The price differential from our distributors to the pump pricing is significantly higher even though it is a commodity.