North American DEF &

Brazilian ARLA 32 Markets

Integer WebEx 05 November, 2013


Your webinar will start shortly
North American DEF &
Brazilian ARLA 32 Markets

Integer WebEx 05 November, 2013


Presenters:

Tim Cheyne Director of Emissions Control
Fabricio Cardoso Senior Analyst, Emissions
James Dixon Account Manager, Emissions
Dorit Schulte Analyst
Louisa Winnik Analyst

www.integer-research.com
Welcome and housekeeping

Phones muted
Questions via Webinar Q&A privately
Audio recording available on www.integer-research.com
Slides available after the webinar
www.integer-research.com
Our regular publications cover both North American &
Brazilian AUS 32 markets
www.integer-research.com
Agenda
The North American DEF Market

How urea prices drive the DEF market in North America

DEF regional prices differences

DEF consumption & SCR fleet forecast

The Brazilian ARLA 32 Market

The Proconve P-7 legislation

SCR fleet growth & ARLA 32 consumption forecast




The North American DEF Market
www.integer-research.com
Urea prices are declining since the beginning of the year
but might have hit the floor
250
300
350
400
450
Nov/13 Sep/13 Jul/13 May/13 Mar/13 Jan/13
NOLA Granular Urea
Price Benchmark, US$/tonne
NOLA prices have lost 30% of their value in
September compared with January 2013

We believe that urea prices have reached a
floor and will remain around $300-320/ton to
January 2014

DEF prices tend to follow NOLA prices, with
delay

www.integer-research.com
DEF prices are less expensive in MSAs in the East Coast for
all supply modes (data from October 2013 DEF Tracker)
1.2
1.5
1.8
2.1
2.4
T
a
m
p
a

S
t
.

L
o
u
i
s

S
e
a
t
t
l
e

S
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l
t

L
a
k
e

C
i
t
y

P
o
r
t
l
a
n
d

P
h
o
e
n
i
x

O
k
l
a
h
o
m
a

C
i
t
y

N
e
w

Y
o
r
k

N
a
s
h
v
i
l
l
e

M
e
m
p
h
i
s

L
o
s

A
n
g
e
l
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s

H
o
u
s
t
o
n

D
e
t
r
o
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t

D
a
l
l
a
s

C
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c
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n
a
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C
h
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c
a
g
o

C
h
a
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l
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e

B
a
l
t
i
m
o
r
e

A
t
l
a
n
t
a

US$/G
FTL
Tote (refill)
LTL
1.8
1.5
2.1
1.2
2.4
M
o
n
t
r
e
a
l

T
o
r
o
n
t
o

C
a
l
g
a
r
y

CA$/G
www.integer-research.com
DEF consumption will reach 200 million gallons in 2013
20
30
10
50
40
0
60
Q2 2011 Q3 2011 Q1 2013 Q1 2012 Q3 2012 Q4 2012 Q4 2011 Q2 2012
17
54
49
44
40
36
31
26
22
Q3 2013 Q2 2013
12
Million gallons
www.integer-research.com
Heavy-duty trucks reached the 500,000 milestone in July
2013 in North America
0
100,000
200,000
300,000
400,000
500,000
600,000
J
a
n
-
1
0

M
a
r
-
1
0

M
a
y
-
1
0

J
u
l
-
1
0

S
e
p
-
1
0

N
o
v
-
1
0

J
a
n
-
1
1

M
a
r
-
1
1

M
a
y
-
1
1

J
u
l
-
1
1

S
e
p
-
1
1

N
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v
-
1
1

J
a
n
-
1
2

M
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r
-
1
2

M
a
y
-
1
2

J
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-
1
2

S
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p
-
1
2

N
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v
-
1
2

J
a
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-
1
3

M
a
r
-
1
3

M
a
y
-
1
3

J
u
l
-
1
3

S
e
p
-
1
3

Cumulative Class 8
SCR deliveries
International DTNA PACCAR Volvo
www.integer-research.com
Navistar prospects beginning to look up
Source: Integer, Bloomberg, CCJ, Forbes
.


15
20
25
30
35
40
45
50
55
60
65
70
M
a
r
-
1
3

J
a
n
-
1
1

M
a
r
-
1
1

M
a
r
-
1
2

N
o
v
-
1
1

J
u
l
-
1
3

S
e
p
-
1
1

M
a
y
-
1
2

S
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p
-
1
2

N
o
v
-
1
2

M
a
y
-
1
1

M
a
y
-
1
3

S
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p
-
1
3

N
o
v
-
1
3

J
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-
1
1

J
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-
1
3

J
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-
1
2

J
a
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-
1
2

US$41
US$27
US$20
US$31
US$37
US$, share price
January , 2012: EPA fined
Navistar per truck for failing to
meet emissions legislation

June, 2012: Court overruled the
EPA and banned fines

August, 2012: CEO Dan Ustian
retires

December, 2012: Navistar
announced they would convert
to SCR technology

June, 2013: Long term credit
rating was downgraded

September, 2013: Largest order
for medium and heavy-duty
trucks since December 2011
The Brazilian ARLA 32 Market
www.integer-research.com
The Brazilian diesel emissions legislation is the most
stringent among BRIC countries
:
PROCONVE P7 legislation, the equivalent to EURO V, was introduced in January
2012

SCR has been the predominant technology choice of local and international
OEMs on the Brazilian market

Brazils legislation is the most stringent in the region



www.integer-research.com
The Brazilian heavy-duty vehicle market has recovered from
the sales slump following the introduction of P7 in 2012
Source: Anfavea, Integer
000 units
0
2
4
6
8
10
12
14
16
18
Jun
13

May
13
Apr
13

Mar
13

Feb
13

Jan.
2013

Dec.
12
Nov.
12
Oct.
12
Sep.
12
Aug.
12
Jul.
12
Jun.
12
May.
12
Apr.
12
Mar.
12
Feb.
12
Jan.
12
Sep
13


Aug
13

Jul
13

Dec.
11
Nov.
11
Oct.
11
Sep.
11
Aug.
11
Jul.
11
Jun.
11
May.
11
Apr.
11
Mar.
11
Feb.
11
Jan.
11
Other
Scania
Volvo
Mercedes-Benz
MAN (VW)
Volvo Iveco
International
Ford
Other
Agrale
Scania
Mercedes-Benz
MAN (VW)
Iveco
International
Ford
Other
MAN (VW)
Iveco
Ford
Agrale
Other
Mercedes-Benz
MAN (VW)
Iveco
Mercedes-Benz Ford
Agrale
Other
Mercedes-Benz
MAN (VW)
Iveco
Ford
DAF Hyundai
Pre-P7
000
www.integer-research.com
Demand for ARLA 32 will hit 1 billion litre annually in 2018
according to Integers forecast
Million litres
2
0
1
8

2
0
1
7

2
0
1
6

2
0
1
5

2
0
1
4

2
0
1
3

180
2
0
1
2

2
0
2
0

2
0
1
9

42
Heavy Semi-heavy Medium Light Semi-light Urban bus Highway bus
000 tonnes
Source: Integer
www.integer-research.com
The Brazilian ARLA market will be highly significant in the
global context
Source: Integer
Million litres 000 tonnes
0
Year 5 Year 7 Year 6 Year 8 Year 9 Year 4 Year 3 Year 2 Year 1
Europe
North America
Brazil
Question time

Integer Research also runs Emission Control conferences

3
rd
Integer Emissions Summit Russia 2014
5 6 March 2014, Moscow, Russia

10
th
Integer Emissions Summit Europe 2014
17 19 June 2014, Dsseldorf, Germany

7
th
Integer Emissions Summit USA 2014
28 30 October, Chicago, USA


Thank you for taking part

For additional information and to purchase this
service:

Tim Cheyne
Tim.Cheyne@integer-research.com

Dr Niels Tholen
Niels.Tholen@integer-research.com

James Dixon
James.Dixon@integer-research.com