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Europe
German bulk AdBlue prices were steady this week as demand picked up, but the duration of supply kept pricing pressures down.
Industry participants continue to compete with increasing volumes of non-certified AdBlue products that do not meet production standards and are trading at a discount, while TTF natural gas prices maintained their current price level, just above EUR 40.00/MWh.
Traders disagree on whether prices could fall or remain stable from May onwards. The stable level of gas prices speaks in favour of keeping prices unchanged. On the other hand, there are still volume pressures, which may lead producers to reduce prices.
Warmer temperatures have boosted activity in the agricultural sector and correspondingly increased demand for AdBlue. One wholesaler's transport fleet is already fully loaded, but other fleets have not yet reached their capacity limits.
GLOBAL COMMENT
These products can be offered at a discount to VDA-licensed AdBlue and undercut nearby producers as urea prices in Europe cannot compete with imports from African or Asian countries due to higher raw material costs. When importing and producing 'AdBlue', traders do not always confirm whether the urea is intended for the production of AdBlue or fertiliser, so sometimes urea intended for use as fertiliser is used. This results in a cheaper solution of urea and water that does not meet the VDA and is therefore not compliant with the AdBlue criteria.
Bulgaria
Cheaper, uncertified AdBlue products are abundant in Bulgaria, prompting the association to be founded in April to take action against them.
TSAKI, Prista Oil Holding EAD and AIBO-C Ltd, founded the Bulgarian Association of AdBlue Producers and Importers and committed to implementing a directive so that only AdBlue that meets the relevant standards and parameters is available on the market.
They also want to introduce a control mechanism to ensure that only raw materials intended for the production of AdBlue are used. Producers and traders can join the association and publicly declare compliance with quality standards.
Natural gas
TTF natural gas prices remain at just over €40.00/MWh this week.
According to GIE, gas stocks in Europe were at 56% of capacity as of 19 April. Demand for gas for heating has fallen since the warmer weather, while gas dispatched from French terminals has increased since the end of the strikes
North America
DEF prices in the US have been stable since the start of the month as spring applications maintain stability in urea markets, while diesel demand has been largely stable week-on-week.
According to EIA data, diesel demand was little changed this week, increasing only 2,000 b/d to 3.76 million b/d. Compared to a year ago, demand was down 2 bpd from 3.82 million bpd. U.S. diesel inventories fell 355,000 bbls from a week ago to 112.1 million bbls. , but increased by 3.1 bp or 3.4 mb y-o-y.
NOLA urea prices are falling while upriver demand is rising
Nola barge prices fell in weaker trade this week as some buyers pulled back to process tonnes bought during last week's flurry of deals.
Several barges for April delivery changed hands at US$380/bbl FOB Nola early in the week to set the upper end of the weekly US$325-380/bbl FOB Nola range. On Thursday morning a barge upriver, outside the Nola assessment area, was trading at 385 USD/cwt FOB Nola.
This week, barges for both prompt and April delivery maintained their premium to the delivery period ahead, despite a general slight decline in values. The May trade at $325/t FOB Nola was at the lower end of the range after selling in the second half of May at $340/t FOB earlier in the week.
Market sentiment in NOLA this week was for relative stability through the end of April, as fast delivery inventories remain relatively low while demand picks up inland. However, local participants expressed doubt about the possibility of sustained price increases in the future, except where shortages in river storage lead to periodic premiums for prompt and loaded barges. But lower values are expected in May, especially after last week's increase boosted forecasts for May imports into the US Gulf Coast.
Basics
DEF demand in North America declined in March.
We estimate DEF demand reached $106.6 million in March, down 0.6% year-over-year due to lower truck activity earlier this year, reflected in lower diesel sales at retailers.
But it still represents a 13.5% increase from February last year, when DEF demand was estimated at just under 94 million.
Argus' estimate for North American DEF demand in 2023 remains at $1.32 billion, which has been adjusted down slightly from last month to reflect the latest U.S. truck sales activity data.
Truck sales rose, but at a slower pace
Commercial vehicle sales in North America remain at higher levels compared to early 2022. March sales were nearly 49,000 units, up 8.4 percentage points from March 2022.
Class 8 sales totaled 24,800 units in the U.S., the highest single-month total since 2021, and 2,800 units in Canada, where volumes were up 13.5% year-over-year.
Class 6-7 truck sales also posted double-digit growth in March 2022 in both the US and Canada, while Class 4-5 truck sales declined over the same period.
The SCR-equipped fleet is 11.3 million units
Argus estimates there will be more than 11.3 million SCR-equipped vehicles on the road by the end of March 2023, up 4.9% from March 2022 and up about 13% from March 2021.
Of these vehicles, the Class 8 fleet is estimated at just over 2.5 million units, an increase of 9.8 percentage points year-on-year.