Diesel exhaust fluid market is estimated to be valued at USD 39.98 billion in 2024, growing at a CAGR of 7.8% over the forecast period (2024-2031). Furthermore, the growing demand for diesel vehicles from developing economies has attributed to the high consumption of DEF as it helps in reducing NOx emissions from diesel engines.
The global diesel exhaust fluid market is driven by two key factors. Firstly, the stringent emission regulations worldwide pertaining to vehicular emission have propelled the adoption of Selective Catalytic Reduction (SCR) systems in diesel engines. SCR helps in reducing NOx emissions from diesel cars significantly by injecting DEF in the system. Non-compliance to these regulations may lead to severe penalties, prompting automakers to deploy SCR technology. Secondly, the rising global vehicle fleet, especially in developing economies of Asia Pacific and Middle East, has augmented the demand for diesel vehicles. As DEF is required for the smooth functioning of SCR units, its consumption increases with the growing number of diesel cars.
Stringent emission norms driving the demand for diesel exhaust fluid
Government across various countries have implemented stringent emission norms to curb the rising pollution levels caused by diesel vehicles. Diesel Exhaust Fluid (DEF) helps in reducing the emission of nitrogen oxides from diesel engines. The selective catalytic reduction (SCR) technology installed in diesel vehicles requires DEF to lower the NOx emissions to comply with the emission standards. The Euro 6 emission norms in Europe and BS-VI emission standards in India have significantly lowered the permissible NOx limits. This has increased the demand for DEF as original equipment manufacturers install SCR systems in newer diesel vehicles to meet the new emission regulations. The implementation of EPA 2010 emission standards in USA has also boosted the usage of DEF. The tightening emission norms worldwide are a key growth driver for the global DEF market.
Increasing diesel vehicle parc is propelling DEF consumption
With rapid industrialization and economic growth, the demand for commercial vehicles like trucks, buses, and off-road equipment is rising globally. Most of these vehicles rely on diesel engines due to their torque, power and fuel efficiency. The total number of diesel vehicles on road has grown significantly over last decade. More diesel vehicles mean higher NOx emissions, necessitating the need for effective after-treatment systems using DEF. Countries with large diesel vehicle fleet like U.S., China, Germany, and India account for major share of the global DEF demand. The growth in diesel vehicle fleet driven by construction, mining and freight industries is augmenting the consumption of DEF, supporting the market expansion.
Rising penetration of SCR systems is expanding the market potential
The only viable technology available currently for meeting stringent emission standards is selective catalytic reduction (SCR) which utilizes DEF or urea solution. Automakers are aggressively adopting SCR technology and its installation rate in new diesel vehicles is increasing globally. Even small cars with diesel engines now come equipped with SCR. The penetration of SCR systems is rising not just in vehicles but stationary generators, locomotives and marine diesel engines as well. This widespread application of SCR technology creates huge demand for DEF across industries. Original equipment manufacturers, retrofitters and Tier-1 suppliers boosting their SCR offerings will drive more DEF sales in future.
Declining diesel fuel prices is restraining the DEF demand
When diesel fuel prices are low, commercial vehicle owners tend to prolong the replacement cycles and put off retrofitting with expensive emission control systems. This reduces the sales of DEF which is essentially needed for SCR after-treatment of diesel pollutants. Many parts of the world have witnessed a drastic fall in diesel costs in last few years due to oversupply. Cheaper diesel makes compliance with emission norms less attractive economically. It discourages fleet modernization and SCR retrofits that augur well for DEF market. Volatile crude oil market and fluctuations in diesel fuel rates can adversely impact the consumption of DEF.
Inherent complexities are hindering the wider adoption of SCR technology
Though proven effective, the SCR technology is complicated requiring separate tank for urea storage, dosing injectors, and extensive piping infrastructure. Unlike gasoline vehicles, retrofitting diesel engines with SCR entails significant modifications adding to costs. The complex multi-component system is also prone to defects like clogged injectors that affect the performance. Small fleet owners find SCR maintenance cumbersome. These inherent complexities of SCR technology act as a challenge for its widespread adoption beyond large trucks and buses. Until the system design is simplified, some segments may opt for alternatives restricting the DEF market expansion.
Emerging opportunities in marine and stationary power industries
The IMO 2020 ruling that mandated the reduction of sulfur content in marine fuel is driving the uptake of exhaust gas cleaning systems using DEF. As retrofitting becomes mandated, global marine industry will witness spike in the DEF demand in the short to medium term. Stationary gensets and power plants will also require upgrading to comply with toughening emission standards leading to new market openings. Countries intensifying their emission norms present fresh revenue avenues. Moreover, developing regions offer headroom for market growth as their vehicle fleets modernize in the coming decade. The rise of rental SCR models enable small operators to utilize the technology, paving way for volume DEF sales. Collaborations with SCR providers open complementary business models for DEF suppliers.
In conclusion, the strict emission regulations worldwide triggered by health and environmental concerns make Diesel Exhaust Fluid (DEF) an indispensable consumable for the diesel industry. While volatile fuel prices and technical complexities of SCR pose challenges, the market stands to benefit from expansion in new application areas like marine, power generation, and emerging economies.
*Link: https://www.coherentmarketinsights.com/market-insight/diesel-exhaust-fluid-market-1263
Key Developments
- In 2024, BPCL, Petroleum refineries company introduced the first mobile Adblue dispenser in Kolkata, India. This battery-powered dispenser reduces the need for commercial vehicle hubs and fuel stations to invest in Adblue filling stations.
- In January 2022, TotalEnergies, a global integrated energy company expanded in Mozambique with the acquisition of BP’s retail network, wholesale fuel business and logistics assets. The transaction covers a network of 26 service stations, a portfolio of business customers and 50% in SAMCOL, the logistics company previously jointly owned by TotalEnergies and BP, which operates the Matola, Beira and Nacala fuel import terminals. This expansion will help in sales of the DEF product for the company.
- In August 2021, BASF and SINOPEC will further expand their Verbund site operated by BASFYPC Co., Ltd., a 50-50 joint venture of both companies in Nanjing, China. It includes the capacity expansion of several downstream chemical plants, including a new tert-butyl acrylate plant to support the growing Chinese market. This expansion will help SINOPEC to increase the distribution of DEF products.
- In 2020, ZF launched new WABCO Diesel Exhaust Fluid for BS-VI vehicles
- In 2020, IndianOil signed an agreement with Cummins Technologies India Pvt Limited for the bulk dispensing of IndianOil’s Diesel Exhaust Fluid (DEF)
Key Players
TotalEnergies, Shell PLC, BASF SE, Brenntag AG, China Petrochemical Corporation (Sinopec), Yara International, CF Industries Holdings Inc, Cummins Inc., Mitsui Chemicals Inc, KOST USA , Nandan Petrochem Ltd., Power Blue International, Advanced Blue , Inabgo DEF, and Palsani Green Power LLP