DEF Index Prices Stabilize, but Supply is Short and Packaging Prices Climb
DEF index, (NOLA) prices have stabilized after a six month escalation. Many distributors, however, are faced with continued cost increases related to DEF. This has led to price increases in June that are decoupled from the index.
Importantly, DEF is supply is short and five major urea producers have started scheduled shutdowns that can last from 4 to 8 weeks. The shutdowns create higher logistics costs for distributors as DEF is shipped from secondary supply points. Transportation costs and packaging increases continue for drums, totes, jugs, and pallets.
The current price of a pallet used to ship four drums of DEF, for example, has increased over 10%. Although some might consider this trivial cost input, this change alone equates to an increase of $0.05 to $0.10 cents a gallon on a pallet of drums.