Diesel exhaust fluid price per gallon is affected by its composition. One part of that composition is UREA. UREA and its purity drive the price of DEF and the price of UREA is affected on a local and global scale. Here is how that works.
Supply and Demand
UREA production is driven by the forces of nature and the growing cycle. The growing cycle is Spring Planting, Summer Growing, Fall Harvesting and Winter Storage. Depending on where demand meets the corresponding supply cycle sets the price of UREA.
How It Works
If demand is high when supply is low, say, late winter through late summer, the price of UREA will be high and thus diesel exhaust fluid prices will be higher as well. If the demand falls during the harvest season through the end of the storage season, or fall through late winter, the supply will be plentiful and that will drive UREA prices down, thus driving down the cost of diesel exhaust fluid.
Other Price Impactors
The growth cycle is not the only thing that affects UREA prices. Production interruptions, import pressure, freight traffic and weather all play a role in setting the UREA price. What that means is that demand can sometimes fluctuate or supplies can be high, but if other factors inhibit getting UREA to market, the price can remain high.
For example, if a series of major storms disrupt shipping routes and shipments of UREA are delayed, prices can increase even when UREA supply is high. Conversely, if the UREA supply is low, but demand is high and the price can skyrocket comparatively.
A General Rule
Pricing experts work off the following formula to determine the projected cost of diesel exhaust fluid:
Every $100/ton of UREA price movement equals $.15/gallon in diesel exhaust fluid price.
Diesel exhaust fluid price per gallon is affected by UREA prices, which are affected by supply, demand and the growing cycle. When projecting transportation or fleet costs, having up to date UREA market information from your diesel exhaust fluid supplier and knowing the relationship between UREA cost and diesel exhaust fluid costs is invaluable.