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China to ship 18,700 tons of urea to South Korea

Nov. 10, 2021 - 15:10 By Ahn Sung-mi
This photo, taken on Tuesday, shows people waiting in line to buy urea water solution in Iksan, 180 kilometers south of Seoul, as a local producer sold the solution to people amid a supply shortage of it.(Yonhap)

About 18,700 metric tons of urea that China was holding back will be shipped to South Korea soon, temporarily alleviating an acute shortage of an essential additive used to cut emissions from diesel vehicles.

China has confirmed that it will proceed with the export process for 18,700 tons of solid urea that was previously contracted to Korean firms, the Foreign Ministry said Wednesday.

Of the total, about 300 tons of urea has cleared customs and will be able to leave the Chinese port around next week, according to a ministry official. Around 6,800 tons is still under inspection, while applications have not yet been completed for inspection of the remaining 11,600 tons.

The urea was held at customs in China after the country last month announced mandated inspections on some fertilizers and related materials, including urea, to address the country’s power crisis prompted by a coal supply shortage.

Urea, the main ingredient in a fluid used in diesel vehicles and factories to cut emissions, is usually made using coal.

Since China effectively restricted exports of urea Korea has been grappling with a dire shortage, and many fear the tight supply could escalate into a major transportation and logistics crisis. Korea imports all of its urea from overseas, with China accounting for 97 percent.

The 18,700 tons of urea from China can be mixed with water to produce approximately 56,100 tons of a urea solution known as diesel exhaust fluid. Considering that the local auto industry uses on average 24,000 tons to 27,000 tons a month, that amount should meet domestic demand for roughly two to three months.

“Given the unspecified amount of domestic reserves, there will be no problem in urea supply for the next three months,” a government official said.

The Foreign Ministry has been stepping up diplomacy to secure urea supplies from China and other countries.

Seoul plans to import 27,000 liters of urea water solution from Australia via military jet this week, as well 200 tons of urea from Vietnam next week. It is also currently in talks with about 10 countries to import a combined estimate of 10,000 tons. 

The ministry said the upcoming shipments from China are the result of “communications through various channels” with the authorities in Beijing aimed at accelerating import procedures.

“We will monitor, manage and consult for a stable import process for urea solution, and will do our best to provide diplomatic support so that there will be no problem in supply and demand,” a Foreign Ministry official said on condition of anonymity.

But industry watchers say accessing overseas supplies is a stopgap solution and that the government needs to come up with a more fundamental solution to the shortage.

The Korean government is scrambling to take additional steps to procure urea and avert a full-fledged logistics crisis.

On Monday it began cracking down on hoarders of urea or urea solution, who can face fines of up to 100 million won ($84,000) or jail terms of up to three years under the Price Stabilization Act.

Seoul plans to release into the market 5.3 million liters of the urea solution that it has procured, starting Friday.