Diesel Exhaust Fluid (DEF) Demand Supply Analysis Study

Diesel Exhaust Fluid (DEF), commonly sold under names like AdBlue, NOx Doser, or AUS 32, is a solution made of 32.5% automotive-grade urea and 67.5% deionized water. It's a non-toxic fluid used in diesel vehicles equipped with Selective Catalytic Reduction system and by injecting DEF into the exhaust, harmful nitrogen oxides (NOx) are broken down into nitrogen and water vapor, which are safe for the environment. This process is essential in helping diesel engines meet current emission standards, especially in the commercial and industrial sectors.

Diesel Exhaust Fluid Supply Analysis

The global production capacity for DEF reached over 20,000 kilo tons in 2024 and continues to rise by around 1,200 kilo tons annually. New facilities expected in Asia Pacific, North America, and Europe and this increase is being driven by tighter emission regulations and the growing use of diesel vehicles and equipment. Yara International alone has over 2,800 kilo tons of capacity installed across North America and Western Europe, making it one of the largest players in the market.

DEF Supply Outlook (2026-2036)

Key global manufacturers of DEF include Yara International, BASF, Dakota Gasification Company, CF Industries, IFFCO (Krinir Industries), EuroChem, Lotte Fine Chemical, Nissan Chemical Corp, Velvex (Nandan Petrochem), Achema (Gaschema), Kelas Environmental Protection Technology Co., Ltd (Lopal), Sichuan Meifeng Blue, Iowa Fertilizer Company, and several other producers.

Between 2026 and 2036, DEF production is expected to expand rapidly in response to rising demand. New plants are likely to be set up in developing markets where vehicle and industrial diesel engine adoption is increasing, especially in Asia. At the same time, upgrades and capacity expansions in developed regions will ensure a stable and diversified supply chain.

DEF Consumption Trends

Global demand for DEF is projected to grow at a CAGR of 6.5% in the short term, with total consumption expected to exceed 26,000 kilo tons. Over the longer term, demand is set to reach approximately 38,500 kilo tons. In 2024, Asia Pacific and North America together accounted for nearly 65% of global consumption, a trend expected to continue through the forecast period. Western Europe currently accounts for under 30% of global demand and is expected to grow at an annual rate of 3.6%, with countries like Germany, France, and Spain seeing higher uptake. In contrast, smaller growth rates (2-3%) are projected for markets like the Netherlands, Austria, Belgium, and the UK. These growth patterns are largely driven by diesel engine use in transport, manufacturing, and agriculture.

India is one of the fastest-growing markets for DEF. The country's production capacity has risen sharply from just 100 kilo tons a few years ago to around 1,300 kilo tons by 2024. Major producers in India include IFFCO (Krinir Industries), Velvex (Nandan Petrochem), Gulf Oil Lubricants, Indian Oil, and Apar Industries. IFFCO and Velvex together account for over half of the domestic production. Gulf Oil Lubricants, for example, operates a DEF production unit in Chennai with a capacity of 75,000 kilo liters, supported by 13 satellite plants with an added 279,000 kilo liters of annual capacity.

The Indian government's enforcement of Bharat Stage VI (BS6) emission standards in 2020, which are on par with Euro 6 norms, significantly boosted DEF demand. Between 2020 and 2024, DEF demand in the country tripled, driven mainly by heavy commercial vehicles (HCVs). About 60% of new HCVs registered in India are now equipped with SCR systems. Lighter commercial vehicles (LCVs) and diesel passenger cars with engines above 2,000 cc also contribute substantially, making up the remaining 40% of the country's DEF consumption.

In the agricultural segment, India is one of the largest tractor manufacturers in the world. However, most tractors have engines under 55 horsepower and typically use Exhaust Gas Recirculation (EGR) or Lean NOx Trap (LNT) systems instead of SCR. Only about 5% of tractors currently support DEF use. In the commercial vehicle segment, all major manufacturers adopted SCR systems in 2017, except for Ashok Leyland, which chose an in-house iEGR (intelligent exhaust gas recirculation) system due to challenges in DEF availability and cost at that time.

Demand Drivers for DEF

Regulatory policies are the biggest force behind DEF demand growth and the US, EU, China, and India have all set strict emission rules requiring NOx reductions in diesel engines. As a result, SCR systems that rely on DEF are now a standard feature in many heavy-duty trucks and buses. Another significant driver is the push to modernize vehicle fleets. Many governments offer incentives to replace old diesel vehicles with newer, cleaner alternatives, especially in the trucking, construction, and agricultural sectors. These newer models are usually equipped with SCR systems, further supporting DEF consumption growth.