LONDON — Volatile pricing of urea — the additive required for SCR engines in Europe — could give North American fleet owners a preview of things to come.

According to Integer Research, a London-based benchmarking and consulting firm, the competitive nature of the urea (called AdBlue in Europe) market — where a struggle to develop early market share has pushed margins to the absolute limit — producers are finding it difficult to absorb cost increases.

Add the fact that producers are getting better returns on urea when it is sold as fertilizer, and no wonder that prices have driven up. Across Europe, AdBlue prices have nearly doubled since last year and Integer Research expects the price to keep rising in the third quarter.

"Although customers are never receptive to price hikes, there is some understanding amongst many haulers that, given the inflationary background of the economy, prices need to increase."

However, industry watchers are keeping a close eye on the urea market, which is dependent on the price of diesel. One concern is that AdBlue prices are allowed to reach a point where manufacturers and fleet owners using SCR would be at a competitive disadvantage to those using EGR.

That point isn’t lost on equipment suppliers in North America, where in 2010 the market will be split between OEM’s utilizing SCR (Daimler-related companies and Volvo) and those extending EGR technology (Navistar) instead.

Though the goods news in Europe, points out Integer, is that there is still a lot of room for movement.