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DEF Prices Expected to Reach Record Highs

Diesel exhaust fluid (DEF) represents an important segment of business for many lubricant distributors, fuel jobbers, and other marketers. And, most who sell DEF are aware that the price of DEF is driven primarily by the cost of urea, and the cost of urea is tied to the price of natural gas. Because of this, it should come as no surprise that urea prices have shot up recently in response the rising price of crude. In fact, at the start of March, the price of urea reached levels nearly 90% above year-to-date prices

DEF market pricing remains decoupled with index movements due to new and varied pricing strategies implemented by producers and is exacerbated urea prices which is on a steep upward trajectory. This escalation is a result of increased demand as economies recover from the pandemic, and tightening supply caused directly and indirectly by Russia’s invasion of Ukraine. 

 In the views of some DEF marketers, and as shown in the chart below, “all hell broke loose” in urea pricing over the past few weeks. Because of this and the geopolitical uncertainties caused by the invasion of Ukraine, many are now filling their tanks with DEF and wondering how tight supply will get and how high the price will reach before there is relief.  

 So, the message here is, DEF supply is expected to remain tight with continued unpredictable price movement as the European conflict continues and the planting season nears.

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