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Record Urea Prices Squeeze AdBlue Margins

LONDON, July 18 /PRNewswire/ -- Urea prices reached record highs in June 2008, increasing the pressure on the AdBlue market's already tight margins. When combined with the additional pressure from the soaring price of automotive diesel, and growing doubts over the health of the commercial vehicles market, it would appear AdBlue suppliers are heading for tougher conditions in Q3 2008.

Given the already competitive nature of the AdBlue market, where the struggle to develop early market share has cut margins to the absolute limit, there is little producers can do to absorb further cost increases given the already tight margins. Indeed, this squeeze on margins has already resulted in a series of price hikes as suppliers look to preserve profitability. Integer also understand from its research that producers are now receiving much better returns on urea when it is sold as fertilizer.

Understandably, neither OEMs, nor AdBlue producers want a volatile AdBlue price, a development that would be ill-received by end-users, especially given the current EGR v SCR climate in countries where Euro 4 sales make fuel savings less obvious. In response to a rapid increase of the urea price and surging energy costs acrossEurope, AdBlue prices have increased by an average of EUR0.08-0.09/L since January 2008. We would expect another AdBlue price increase in Q3 2008 as input costs look set to remain high through the rest of the year.

Although customers are never receptive to price hikes, there is some understanding amongst hauliers that, given the inflationary background of the economy, prices need to increase. Producers also understand that AdBlue prices should not be allowed to reach a point where manufacturers using SCR would be at a competitive disadvantage to those using EGR. However, there remains room for movement, with the ceiling AdBlue price dependent on the price of diesel, which continues to rise as international oil prices surge.

Please remember, the discount date for the AdBlue Monitor ends on Friday, the 1st of August. If you have not already purchased the AdBlue Monitor and would like to take advantage of this offer please visit us at http://www.integer-research.com/emissions

    Editorial Contacts
    Integer Research
    Kingsley Maunder
    +44-20-7503-1265

SOURCE Integer Research Ltd

Tags: ,AGR,AUT,OIL,TRN,SLS,Integer-Research-Ltd

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Record Urea Prices Squeeze AdBlue Margins