Diesel car owners nervous as China limits exports of urea

The Korea Times

The Korea Times

Finance

Wed, November 29, 2023 | 17:32

Markets

Diesel car owners nervous as China limits exports of urea

Posted : 2023-09-10 16:07

Updated : 2023-09-11 15:30

An employee at a supermarket in Seoul checks stocks of liquid urea on shelves, Friday. Yonhap

Gov't downplays supply concerns

By Ko Dong-hwan

Diesel car owners and retailers selling liquid urea in import-dependent Korea are concerned about a possible shortage of the substance after news reports surfaced that China has limited exports of the organic compound, according to industry officials, Sunday.

However, the government has downplayed the concerns, dismissing the possibility that the country's urea import routes will be blocked. Officials assured the public that the nation has enough urea stocks for the next two months and further needs will be secured without any difficulty.

Local concerns arose following news reports from outside the country last week saying the Chinese government has suspended a local fertilizer producer from exporting urea for fertilizers. Korea imports up to 17 percent of its urea for fertilizers from China and the rest from other countries like Qatar and Saudi Arabia. But when it comes to urea for diesel vehicles and other industrial purposes, Korea depends on China for over 90 percent of its imports.

Some Koreans already started stockpiling industrial urea solutions from gas stations, supermarkets and other local retailers in Korea. They were afraid another urea shortage crisis could emerge following the time in 2021 when China curbed shipments sending Koreans into a state of mayhem. For those whose livelihoods depended on using diesel-running vehicles ― like construction or other large trucks ― the impact was particularly significant.

While monitoring the simmering public scare, the central government has made announcements to abate rising concerns.

The Ministry of Economy and Finance said Friday that they confirmed China has not implemented an official ban on shipments of urea by fertilizer firms. The authority added that the domestic supply would remain stable even if there were any curbs.

Ministry of Economy and Finance official Kang Jong-seok, speaks about the Chinese government's latest suspension of the export of urea for fertilizers at the ministry's building in Sejong, Friday. Yonhap

"Currently, one Chinese chemical fertilizer firm has announced a plan to reduce its export volume," an official from the finance ministry said. "As the relationship with China remains stable, we do not anticipate a comprehensive export ban as observed in the past. Imports of urea for fertilizer are diversified, and the price is stabilizing. There will be no problem with the future supply."

Other ministries have also pointed out that urea for industrial purposes has been stocked by both the government and private sector in amounts sufficient for more than 60 days. An official from the industry ministry said Korea outsources urea from diversified countries in Southeast Asia and the Middle East since the crisis in 2021 when China was the only provider.

The Ministry of Agriculture, Food and Rural Affairs said that even if China implements an export curb on urea, it is "expected to have only a limited impact on the supply of fertilizer in the local market."

There are, however, concerns about the worst-case scenario, if a second urea shortage crisis occurs in Korea. China is the world's biggest urea producer and Korea still largely relies on China for it. If the Chinese government's suspension of exporting urea for fertilizers continues indefinitely, it is also possible the measure will expand to urea for industrial purposes.

An industry ministry official said the government has started discussions with the Chinese Embassy in Korea and other Chinese government offices here to make sure the trade of urea will remain unaffected.

aoshima11@koreatimes.co.kr