ASX shares that could be impacted by AdBlue shortage

Who will be the ASX winners and losers out of the AdBlue diesel crisis?

| More on:
A man looks frustrated with head on hand as he fills up car at service station.

Image source: Getty Images

The AdBlue crisis doesn’t seem to be abating even as new supplies are set to hit our shores and, as with any crisis, there will be ASX winners and losers.

The clock is ticking as Australia is due to run out of the fluid that limits noxious diesel exhaust within weeks. This could cripple the country’s supply chains as trucks and other heavy machinery might not be able to operate without the additive.

ASX shares getting a sales boost

Panic buying is driving sales of AdBlue with Super Retail Group Ltd (ASX: SUL) and Bapcor Ltd (ASX: BAP) surging.

Super Retail owns the Supercheap Auto chain while Bapcor runs Autobarn. Some stores have reportedly run out of stock. Those that still have supplies have imposed customer limits.

Thankfully there have been no reported punch-ups in the aisle like those we saw at Woolworths Group Ltd (ASX: WOW) during the Great Toilet Paper Run – at least not yet.

Running on empty

Australia’s largest supplier of AdBlue, DGL Group Ltd (ASX: DGL), has only around six weeks of stock left.

Australia will get a new supply of AdBlue from Indonesia and has approached several Middle Eastern countries to source urea, AdBlue’s principal ingredient.

However, the disruption to shipping lines caused by the global pandemic is complicating the picture. Even if Australia can find supply, it may take a while before it gets to our shores.

What is AdBlue and urea?

China, one of the top five largest exporters of urea, has effectively stopped its export to control surging domestic prices.

AdBlue is made by mixing organic compound urea and deionised water. It is essential to cut harmful emissions from diesel engines as it converts nitrogen oxides into nitrogen and water.

The chemical is contained in a separate tank on diesel vehicles. Motorists can fill up on AdBlue at petrol stations like those run by Ampol Ltd (ASX: ALD) and Viva Energy Group Ltd (ASX: VEA). This, of course, assumes that you can find stock as petrol stations are also struggling to find supply.

Other impacts that ASX investors should be wary of

Urea is also used as fertiliser and shortages can impact food security. This is why China is so keen on keeping as much of it as it can to put downward pressure on prices.

At this stage, no one is thinking of the impact on food prices as the AdBlue emergency is stealing the limelight. But perhaps we could soon start hearing about this, especially as inflation fears continue to grip markets — unless demand and supply are brought back into balance.

Experts blame soft commodity prices for the larger than expected demand for urea. Farmers around the world are planting crops to capitalise on higher agricultural prices.

It seems Australia isn’t the only country scrambling to find alternative supplies either. This means the price of urea is likely to stay elevated for longer, even though there are alternative fertilisers that farmers could use.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Super Retail Group Limited. The Motley Fool Australia owns and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A group of people in suits watch as a man puts his hand up to take the opportunity.
Blue Chip Shares

2 ASX blue-chip shares this top fund manager thinks are good value

Wilson Asset Management offers its thoughts on a couple of blue-chip shares.

Read more »

Illustration of men and women pushing share price graph up
Share Market News

Why are ASX 200 shares rebounding on Friday?

China's COVID-zero policies have slowed its economic growth and impacted its trading partners.

Read more »

Boy looks quizzical standing in front of a graph.
Share Market News

Here are the 3 most traded ASX 200 shares on Friday

We take a look at the most traded ASX 200 shares by volume today.

Read more »

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Bank Shares

What’s moving the CBA share price higher this week?

Australia's banks are expected to reap higher profits as the RBA increases the official cash rate.

Read more »

a woman in a wheelchair sits at her desk in her home with headphones on and looking at a computer screen of figures. monitoring the CBA share price
Share Market News

ASX 200 midday update: BHP, IGO, and Woolworths charge higher

The ASX 200 is ending the week strongly...

Read more »

A woman wearing a pink blouse and straw hat holds up a cannabis leaf with tall green cannabis plants in the background
Cannabis Shares

Remember when ASX cannabis shares were smoking hot? Where are they now?

Newly legalised recreational and medicinal marijuana markets aren't getting the media hype they once did.

Read more »

Broker looking at the share price on her laptop with green and red points in the background.
Share Market News

5 things to watch on the ASX 200 on Friday

The ASX 200 is expected to have a subdued finish to the week...

Read more »

Top 10 ASX shares today
Share Market News

Here are the top 10 ASX shares today

Here are your top 10 biggest gainers in the ASX 200 on Thursday.

Read more »