(Reuters) – Fertilizer companies, coping with a stubborn price slump, are banking on tighter emissions standards for diesel trucks in the United States and Europe to buoy their balance sheets.
Nitrogen fertilizer producers including CF Industries Holdings Inc and Agrium Inc are accelerating output of diesel exhaust fluid (DEF), a water and urea solution used to reduce emissions of nitrogen oxide. The niche market offers premiums of $50 to $100 per short ton over the crop nutrients they sell at prices that are depressed due to excessive supplies.
DEF demand has risen since the U.S. Environmental Protection Agency set tighter emissions controls in 2010 for diesel trucks made by Volvo [VOLVO.UL], Daimler AG and others. The European Union, in which DEF is known as AdBlue, introduced similar legislation in 2013.
Fertilizer companies have increased DEF output this year to coincide with openings of several new or expanded U.S. nitrogen plants, and as lower-emission trucks replace aging vehicles on the road.
“We love it – it’s a great business for us,” Bert Frost, CF Industries’ senior vice-president of sales, market development and supply chain, said in a recent interview. “It builds our customer base and gives us (options) on production.”
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