5 Nov Pm Def Us Arla 32 Brazil

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


Our regular publications cover both North American &

Brazilian AUS 32 markets


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


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


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

Tam

pa

St.

Lo

uis

Seatt

le

Salt L

ake C

ity

Po

rtla

nd

Ph

oen

ix

Okla

hom

a C

ity

New

Yo

rk

Nash

ville

Mem

ph

is

Los

An

gele

s

Ho

ust

on

Detr

oit

Dalla

s

Cin

cin

nati

Ch

icag

o

Ch

arlo

tte

Baltim

ore

Atlan

ta

US$/G

FTL

Tote (refill)

LTL

1.8

1.5

2.1

1.2

2.4

Mo

ntr

eal

To

ron

to

Calg

ary

CA$/G


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


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

Jan

-10

Mar-

10

May-

10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar-

11

May-

11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar-

12

May-

12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar-

13

May-

13

Jul-

13

Sep

-13

Cumulative Class 8 SCR deliveries

International DTNA PACCAR Volvo


Navistar prospects beginning to look up

Source: Integer, Bloomberg, CCJ, Forbes

.

15

20

25

30

35

40

45

50

55

60

65

70

Mar-

13

Jan

-11

Mar-

11

Mar-

12

No

v-1

1

Jul-1

3

Sep

-11

May-

12

Sep

-12

No

v-1

2

May-

11

May-

13

Sep

-13

No

v-1

3

Jul-1

1

Jan

-13

Jul-1

2

Jan

-12

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


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

• Brazil’s legislation is the most stringent in the region


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


Demand for ARLA 32 will hit 1 billion litre annually in 2018

according to Integer’s forecast

• Million litres

2018

2017

2016

2015

2014

2013

180

2012

2020

2019

42

Heavy Semi-heavy Medium Light Semi-light Urban bus Highway bus

‘000 tonnes

Source: Integer


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 3rd Integer Emissions Summit Russia 2014 5 – 6 March 2014, Moscow, Russia 10th Integer Emissions Summit Europe 2014 17 – 19 June 2014, Düsseldorf, Germany 7th 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 [email protected] Dr Niels Tholen [email protected] James Dixon [email protected]

Documents

5 Nov Pm Def Us Arla 32 Brazil