China's restriction on urea exports won't cause shortage in Korea, Finance Ministry says

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China's restriction on urea exports won't cause shortage in Korea, Finance Ministry says

Published: 08 Sep. 2023, 12:12 Updated: 08 Sep. 2023, 17:30

SHIN HA-NEE
[email protected]

Bottles of diesel exhaustion fluid made of urea are on display at a supermarket in Seoul on Friday. [YONHAP]

The Korean government said there will be no disruption in urea supply in response to a Bloomberg report that China is restricting urea exports, which fueled concerns that Korea's massive urea shortage crisis two years ago may occur again.

According to the report on Thursday, the Chinese government asked fertilizer suppliers to halt urea exports following price hikes in the country, suggesting that the export suspension may result in supply disruptions.

Urea is a chemical compound used for producing fertilizer and diesel exhaust fluid (DEF) for diesel engines.

China is the world's largest urea supplier. In late 2021, China's export curbs on urea solutions led to a massive supply shortage in Korea, taking a toll on diesel car and truck drivers.

However, the Korean government expects that there will be no urea shortages this time, whether it be for fertilizers or DEFs.

In a statement Friday, the Ministry of Economy and Finance said that import channels of urea for agricultural uses have diversified from China over the last two years, and the price is now being stabilized, ensuring there will be no supply disruption through the end of the year.

According to the ministry, Korea's dependency on fertilizer urea decreased from 2021's 65 percent to 17 percent this year. Qatar and Saudi Arabia represent a combined 51 percent of Korea's total fertilizer urea imports.

Moreover, for automotive urea products, the ministry said, "There have been no anomalies lately regarding automotive urea product imports," adding that Korea currently has 60 days' worth of urea reserves.

The Ministry of Trade, Industry and Energy also said in a statement that "the government is in discussion with the relevant administrative branches in China and the Korean embassy in China to prevent any disruptions in importing urea products."

"The government has been securing urea reserves through a national stockpiling program since the urea solutions shortage crisis in 2021," the ministry said, adding, "Since there are other import channels in the Southeast Asian and Middle East regions and the private companies are seeking to secure reserves, we will be able to sufficiently respond to any potential supply risks."

While the Chinese authorities have not implemented official restrictive measures on urea exports, the country's urea supplier announced in September that it would cut the export volume to secure a stable domestic supply.

Meanwhile, shares of urea-related companies traded strongly in Korea's stock market on Friday. Lotte Fine Chemical rose 5.93 percent, closing at 62,500 won ($46.85). Chobi jumped 20.29 percent to 15,830 won.

BY SHIN HA-NEE [[email protected]]