China FTA meeting fuels fears of urea shortage

Industry

Published: 05 Dec. 2023, 19:17 Updated: 05 Dec. 2023, 19:25

China FTA meeting fuels fears of urea shortage

A gas station in Seoul limits urea purchases to single bottle on Tuesday after China halted customs procedures for urea exports to Korea. [YONHAP]

China failed to address its current block on urea exports in a statement released regarding the fifth meeting of the free trade agreement (FTA) joint commission on Monday.

China was widely expected to address the crucial topic during the meeting, which took place in Beijing. The chemical compound's absence from its official statement, released by the Chinese Ministry of Commerce, has stoked fears of a potential shortage in Korea.

China's customs authorities blocked the export of Chinese urea to Korean companies on Sunday, according to industry officials, but have yet to provide any explanation. The last time China restricted urea exports in 2021, Korea suffered major disruptions to its logistics networks. Urea is a chemical compound used for producing fertilizer and diesel exhaust fluid (DEF) for diesel engines.

Korean Trade Minister Ahn Duk-geun and China’s International Trade Representative, Wang Shouwen, attended the meeting alongside a customs official who had halted shipments of urea.

Immediately following the event, the Ministry of Trade, Industry and Energy announced that the Korean delegation had urged China to immediately resume customs procedures for urea exports to Korea, stressing that the delay could negatively impact overall supply chains.

The Chinese Ministry of Commerce, meanwhile, announced Monday that it had established communication channels for export control, as well as a supply chain hotline, with Korea. The matter of urea was absent from its statement.

China’s restriction of urea exports is expected to continue until next year. China’s network for chemicals and fertilizers stated that “the country’s 15 major trading firms have agreed to limit total exports of urea to 944,000 tons” on its website on Friday.

According to China Customs data, China shipped around 3.4 million tons of urea to Korea between January and October for this year. The 944,000 that trading firms have purportedly agreed to would only constitute 27.8 percent of that figure. If that policy holds, Korea, which relies on China for 91.8 percent of its industrial urea supply, would face a decrease of more than 70 percent in its urea imports from China.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]