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German haulage industry could be hit as AdBlue maker runs down stock

·2-min read

By Ludwig Burger and Patricia Weiss

FRANKFURT (Reuters) -Supplies of exhaust cleaning fluid in Germany needed to keep diesel vehicles on the road, were thrown into doubt on Wednesday as one of the country's largest makers of AdBlue said its stock was almost gone after it halted production due to high gas prices.

Germany's biggest ammonia and urea maker SKW Piesteritz, stopped production about two to three weeks ago to avoid further losses and is about to sell off its remaining AdBlue inventories, a spokesperson told Reuters.

"We are running dry. We are emptying our inventories because we are no longer producing," he said.

AdBlue is needed in modern diesel engines of trucks and buses to comply with nitrogen oxides exhaust rules. Germany is particularly reliant on AdBlue because of the large proportion of diesel-powered passenger cars on its roads.

The energy crisis facing Europe has grown more acute after Russia's Gazprom indefinitely suspended gas supplied through the Nord Stream 1 pipeline to Germany last week.

"We have not yet been able to observe a real shortage, but we are prepared for this and will turn to measures if necessary to keep this important substance available," an economy ministry spokesperson said, adding the government is monitoring markets that rely heavily on gas.

Imports from abroad may be an option and producers might qualify for emergency state funding, he added.

In the AdBlue market, SKW Piesteritz competes with companies including BASF and Norway's Yara, which run large plants in Germany for ammonia and related substance urea.

These basic chemical feedstocks also play a key role in the manufacturing of nitrogen fertilisers as well as some engineering plastics. The chemical reactors also yield high-purity carbon dioxide (CO2) as a byproduct, which is needed by the meat and fizzy drinks industries.

BASF said that it continues to serve the AdBlue industry from its chemical complex in Ludwigshafen.

It declined to say whether it can offset the supply gap left by its rival.

The chemicals maker said earlier this week it was reducing its European ammonia output due to surging gas costs and that it is sourcing some from external suppliers.

Germany has no liquefied natural gas (LNG) port terminals to replace Russian pipeline gas so companies are under political and commercial pressure to reduce gas intensive activities if gas deliveries are cut further.

Yara said last month it was using only around 35% of its European ammonia capacity because of the cost of gas. The company did not immediately respond to a request for comment.

The managing director of Germany's association of transport and logistics companies, BGL, was quoted in daily Bild tabloid saying an AdBlue supply shortage could materialise in two weeks.

"No AdBlue means no lorries. And that means no supplies for Germany," BGL head Dirk Engelhardt told Bild, calling on the federal government to act.

(Additional reporting by Rachel More in BerlinEditing by Mark Potter and Elaine Hardcastle)