Diesel Exhaust Fluid (DEF) is an aqueous urea solution that is injected into the exhaust system of diesel engines in order to reduce emissions of nitrogen oxides by converting them into nitrogen, water, and tiny amounts of carbon dioxide using a catalytic converter. DEF improves air quality by reducing smog-producing nitrogen oxide emissions from diesel engines by over 90%. The global Diesel Exhaust Fluid Market is estimated to be valued at US$ 11.60 million in 2023 and is expected to exhibit a CAGR of 7.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
Stringent emission regulations present a major market opportunity for the diesel exhaust fluid market. Stringent emission standards implemented by regulatory bodies like the Environmental Protection Agency (EPA) and others are pushing automakers to develop advanced emission control systems that rely on DEF to reduce nitrogen oxide emissions from diesel engines. For instance, the EPA’s near-zero NOx emissions standards for on-road trucks require an around 90% cut in nitrogen oxides from engine exhaust. Compliance with such strict emission norms requires effective after-treatment systems like selective catalytic reduction (SCR) that use DEF. Thus, stringent emissions regulations enforcing the use of SCR technology is expected to drive the demand for DEF over the forecast period.
Porter's Analysis
Threat of new entrants: The threat of new entrants is moderate due to high capital requirements and need for established supply chains and distribution networks.
Bargaining power of buyers: The bargaining power of buyers is high given the presence of many established players and commodity nature of the product. Buyers can negotiate on price easily.
Bargaining power of suppliers: The bargaining power of suppliers is moderate due to availability of substitute raw materials and regional presence of suppliers.
Threat of new substitutes: The threat of new substitutes is low as diesel exhaust fluid has no close substitutes and is mandated for diesel trucks and vehicles in key markets.
Competitive rivalry: The competitive rivalry is high among existing players.
SWOT Analysis
Strengths: Growing vehicle fleet, stringent emission norms, product visibility due to mandatory use are key strengths.
Weaknesses: Seasonal demand, requirement of dedicated storage and handling infrastructure are weaknesses.
Opportunities: Penetration in emerging markets, growth of heavy commercial vehicle sales present opportunities.
Threats: Volatility in raw material prices, subsidization of electric vehicles are threats.
Key Takeaways
The global diesel exhaust fluid market is expected to witness high growth owing to stringent emission standards for diesel vehicles across regions.
Regional analysis of fastest growing and dominating region is North America. The North American DEF market is projected to grow at a moderate 5% CAGR during the forecast period primarily driven by the region's large vehicle parc and legislative push for cleaner vehicles. Stringent emission norms such as those stipulated in the US EPA's Omnibus rule are driving demand growth.
Key players operating in the diesel exhaust fluid market are Yara International, BASF SE, CF Industries Holdings Inc., Agrium Inc., Cummins Inc., Shell ROTELLA (Royal Dutch Shell Inc.), Mitsui Chemicals Inc. Cummins Inc. is the largest player with over 30% market share.
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