Patrick Lammers is the Managing Director of Dureal, a position he has occupied for the last two years. Prior to his appointment at Dureal, Mr Lammers spent 14 years with Royal Dutch Shell, working in a wide range of engineering and commercial management roles.
What is Dureal's latest AdBlue market
initiative?
At Dureal we are focused on the delivery of quality AdBlue to our
customers, and expansion of our customer base by enlarging our OTR
network, installing homebase units for large hauliers and
establishing a distributor network across Europe. Furthermore, we
have recently refreshed our company's branding, emphasizing our
capability to deliver AdBlue, as opposed to our technical
capacity.
How much AdBlue do you estimate will be used in Europe in
2007 & 2008?
I believe we can follow the ACEA stats, plus or minus a few
percentage points. For 2007 we estimate a total of 300 million
litres AdBlue in Europe. Then, roughly doubling Year-on-year until
we reach maximum SCR adoption.
Which countries in Europe have seen the strongest growth in
AdBlue use? Are the Mediterranean countries still lagging behind
Northern Europe?
In terms of AdBlue use, Germany is clearly leading the pack. This
growth has been driven by the MAUT road-toll reduction for SCR
equipped trucks. We have also seen growth in AdBlue demand from the
Benelux region, with the rest of Europe developing at a slower
pace. So far the development of AdBlue demand is in line with our
expectations.
How do you see AdBlue demand for passenger car applications
developing? When do you think significant volumes will be
required?
We anticipate the initial demand for AdBlue in passenger cars to
come from the USA. However, early volumes will be low and the
market is very different to what we are used to in Europe.
How is the AdBlue supply structure forming - mostly public
OTR filling or homebase filling?
The customer has many options when it comes to AdBlue supply;
packed, homebase and OTR. At present, the direction the market will
take is unclear as many oil companies have not clearly set a
strategy for all countries, or their fuel card schemes. Customers
adopting SCR technology early have implemented homebase refueling
strategies due to lack of OTR availability. In the future we may
see more operators using OTR. AdBlue tank size is also an important
factor and varies between truck applications. Therefore, Dureal is
not concentrating in any area and is ready to respond to any
significant change in market trends.
What impact do you think OEM "free AdBlue" policies will
have on the supply structure?
I do not believe that there will be a long term influence on the
supply structure of AdBlue. However, it does have an immediate
effect, with the perceived value of the product being reduced -
anything you get for free is something you do not value.
What do you anticipate the Euro VI NOx limits will
be?
Industry experts debate the details, but we anticipate that the
Euro VI NOx limits will be lowered again, possibly closer to the
EPA 2010 limits. In my opinion the OEMs will be reaching the limit
of what can be done with a diesel combustion engine.
What effect will this have on European AdBlue
demand?
Not a lot. I think everyone is aware of combination EGR/SCR as the
only feasible technology for further NOx reduction under the Euro
VI regime, and we do not foresee any major changes in AdBlue demand
resulting from this. Of course, in the end, OEMs who are still
promoting EGR will shift to SCR technology.
Is Dureal involved in this process?
No, this is for legislators and the OEMs to sort out. Dureal is
there when people need AdBlue, and we will meet the AdBlue demand
resulting from this legislation.
Does Dureal have any plans to enter markets outside of
Europe i.e. USA for 2010? Asia?
We do have plans. However, we will not disclose corporate strategy
on this forum.
What factors are responsible for the current low prices of
AdBlue - like €0.25 for homebase and €0.35 at the pump in
Germany?
First of all, AdBlue prices vary significantly in Europe,
reflecting competitive forces and supply chain cost differentials.
As everybody knows, there has been a long run towards the 1 October
2006 Euro IV emissions deadline, with many players involved in the
race investing heavily to tie up AdBlue market share. Everybody is
now looking to increase or consolidate their market share, and no
one wants to miss out. The effect of this level of competition has
been to push down the price of AdBlue. We also see higher prices
then the ones mentioned above in the question and I believe a price
increase is only a matter of time. AdBlue companies need to make a
margin one day, and especially when the volumes start to kick in,
the negative margins are becoming a real pain. Therefore, we - like
the majority of experts on this matter - foresee that current price
levels are not sustainable long term and price increases are
inevitable.
There are number of companies operating in the AdBlue
market in Europe. Do you think industry consolidation is
inevitable?
We may or may not have industry consolidation. The general
perception at present is that some players will exit the market
because of low product pricing, and the high costs associated with
immature supply chain infrastructure. The current licensing policy
of the VDA might be a game changer, with many new entrants given
the AdBlue trademark without being checked on product quality. This
will invert the consolidation. Anyway, Dureal is positioned as a
pan-European player and our strategic focus is on the expected
AdBlue lifetime in the industry.
Is the required AdBlue quality being maintained across the
European AdBlue industry?
We have our opinions. Dureal is a full division of a listed company
and can not afford to tamper with quality, whereas other players
may have other standards. We have our checks and controls in place,
however, we have no control over the other players - this job is
for the legislators, VDA and possibly the OEMs. It is important
that questions are asked and action is taken if the quality is poor
or there are contaminants in the AdBlue which could possibly harm
the vehicle and/or public health and the environment.
Are there concerns that large numbers of operators may be
operating SCR vehicles without AdBlue or substandard
AdBlue?
We do see this in Europe. OBD II is not in place yet and not all
countries have the legislators' controls, or know how to enforce
this issue. We even have reports that some OEM's shut off the
system on request of fleet operators. This is a worry for companies
like Dureal and for SCR technology as a whole.
How has Dureal managed the impact of record high urea
prices on AdBlue costs?
We, like any other company, absorb it or off load it by hedging our
purchase of raw material. Our strategy, as an independent source,
helps us here. We are flexible and even buy from our competitors
when it fits the purpose. The market is still in the start up phase
and there is no pricing mechanism (i.e. Platt's for Diesel) in
place, therefore, recovery is difficult at this time. Anyway, as
explained earlier it is just a matter of time before AdBlue prices
start reflecting the full cost of the product and supply chain.
