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The complex global automotive grade urea market – understand the finer details to see the bigger picture

Posted On: 12-09-2018 By: Alicia Bennett

By Alex Wood, Editor of The Automotive Grade Urea Forecast Service, Integer Research

We estimate that 2.77 million tonnes of automotive grade urea (AGU) were consumed globally over 2017, and we forecast that the market will grow on average by 12% year-on-year over the next ten years. This growth will be mainly driven by Europe, North America, China and Latin America, with both Europe and North America looking largely to domestic AGU production to meet AdBlue®/DEF demand. North America will still import AGU, but imports are expected to be limited to the East and West Coasts, away from the domestic producers that are primarily in the Midwest region.

China and Russia are forecast to remain net exporters of AGU. Volumes from China will still be driven by rising demand from Asia Pacific countries such as Japan, South Korea and Australia, while Russia is in a good position to supply Latin America, particularly Brazil. Following the steep decline in production at its domestic AGU plants over the last two years, we expect Brazil to rely entirely on AGU imports from 2019 (although these plants could come back into play in a few years’ time).

The unique circumstances of some countries come into play when analysing the overall AGU supply and trade picture. Take India for example, there is no domestic AGU production in India because the Indian government forbids production of urea for non-agricultural use.  The market therefore relies entirely on AGU imports to meet demand, and we forecast that this will continue to be case over the next ten years. The Indian government has ambitious plans to introduce its most stringent legislation yet, BS VI by 2020, which will further drive demand for SCR, and therefore AUS 32 and AGU, and contribute to India becoming one of the biggest importers of AGU by 2024.

We also estimate that 18% of the AGU consumed in 2017 was traded between countries (not including volumes sent between European countries and directly between the US and Canada), and we forecast that the traded volumes of AGU will grow by 16% year-on-year over the next ten years to 2.3 million tonnes in 2028. The main importing regions will be North America, Latin America and India.

Each region around the world has its own set of unique AGU market supply, trade and demand circumstances making the global AGU market a tricky one to follow if you don’t have access to the right analysis.

This is why we update our Global Automotive Grade Urea Forecast Service on a quarterly basis. This report drills down into AGU supply, demand, trade and pricing to reflect the consequences these dynamics have on the production of AGU and therefore AUS 32 worldwide. Subscribers gain invaluable insights into the competitive landscape and can put the report to practical use to find alternative sources of high quality AGU at lower prices. To see a typical table of contents from the report, click here.

If you have any questions about the global AGU market, or to find out more about The Global Automotive Grade Urea Forecast Service, email publications@integer-research.com or call us on +44 20 7503 1265, we’d be happy to talk you through our research.

More background on AGU…

OEMs have been using Selective Catalytic Reduction (SCR) aftertreatment systems to meet NOx standards since the implementation of Euro IV in Europe and EPA 2010 in North America. Over the years, more and more countries have enforced emissions standards stringent enough to require the use of SCR systems, so it comes as no surprise that global SCR sales are expected to rise over the next ten years.

SCR technology requires AUS 32 to operate and therefore the demand for AUS 32 rises as SCR adoption becomes more widespread. Also known as AdBlue®, DEF or ARLA 32 – AUS 32 is an aqueous solution that is produced by mixing automotive grade urea (AGU) and deionized water to a urea concentration of 32.5wt%. It’s a high-quality urea solution defined by ISO 22241-1.

As more AUS 32 is required in line with increased SCR use, the spotlight lands firmly on the AGU market, the production of which is relied upon to meet rising AUS 32 demand.