Increase for Raw Materials Effective Jan. 1 Precedes Annual Adder Increase for Rail Freight
Due to increases announced by diesel exhaust fluid (DEF) suppliers, SCL is increasing DEF prices immediately by $0.25 per gallon. In addition, another increase will take effect later in the month to account for the annual “adder” hike tied to rail freight negotiations. No rates have been announced for the adder as of yet.
The $0.25 per gallon price increase comes just over four weeks after the last increase in December 2021, leaving DEF prices at the highest they have been in history.
“Based on what we have been seeing and experiencing over the past year, this was to be expected but it’s still a blow for our customers, for sure. Unfortunately, everyone is anticipating this trend to continue since there are no signs that costs for urea, transportation, packaging, and others will stop their upward trend.” said SCL Vice President of Customer Solutions Dan Dziwanowski.
According to a market update released by Blue DEF, every step in the process to bring DEF to market has become more costly, from those incurred by domestic urea producers to transportation costs to packaging for totes, drums, jugs and bulk. To make matters worse, the industry is dealing with worker shortages and imported prill that has created a shortage of raw materials.
*Base period is January 2020, prices defined in industry standard units (ton, gallon, etc.)
“We are doing our best to shield our customers from the full impact of constantly increasing costs, but further urea costs and supply chain production expense increases since October force us to make additional adjustments,” states the price increase announcement from Old World Industries. “Natural gas production continues to lag demand and multiple markets are emphasizing UAN (fertilizer) production over that of AGU. All current projections point to ongoing urea price inflation as we move into 2022. This includes both base material purchase cost and chemical production expense.”
Although rail freight negotiations – known as an “adder” – will merit a second increase at some point during the month, that date remains undetermined as of yet. Customers will be notified offline.
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