LX, Lotte, POSCO Int'l CEOs respond to 'urea water' shortage crisis

From left, LX Holdings Chairman Koo Bon-joon, Lotte Group Chairman Shin Dong-bin and POSCO International CEO Joo Si-bo

Corporate leaders assist gov't to secure DEF supply

By Kim Hyun-bin

The Korean government has been scrambling to implement emergency measures to ease the supply shortage of diesel exhaust fluid (DEF), known here as "urea water," following the strengthening of export restrictions in China.

Urea water is used to reduce emissions in diesel vehicles. Despite the government's efforts, the supply has been falling short of demand. Just this year alone, the country has been hit hard by semiconductor chip and urea water supply shortages.

Industry sources say the government must reexamine supply chains and cooperate with conglomerates to utilize their vast overseas networks in times of emergency.

Although the government has struggled to obtain a sufficient supply of urea water, major conglomerates such as LX International, Lotte Fine Chemical and POSCO International have utilized their overseas connections and networks to secure the much-needed materials.

"Other countries are facing shortages of urea and urea water as well and it is not about who can pay more for it or who can utilize their overseas branches, but these contracts have been difficult without high-ranking officials' direct connections and involvement," an industry source said.

Urea crisis reveals risks of Korea's supply chain

2021-11-14 11:11 | Foreign Affairs

According to the industry source, LX International secured an additional batch of 1.45 million liters of urea from Vietnam and Singapore, Friday.

This comes two days after the company secured the first batch of 1.10 tons of urea ― which is enough to create 3.3 million liters of urea water ― from China, and 1.25 million liters from Vietnam, importing a total of 6 million liters of urea into the country.

Considering the fact that the average daily use of urea water for vehicles in Korea is around 600,000 liters, the total import amount can supply the nation's diesel vehicles for 10 days.

LX Holdings Chairman Koo Bon-joon is said to have played a major role in securing urea by placing an urgent order, after concerns of a possible logistics crisis were raised due to China's export restrictions.

Lotte Fine Chemical also secured 19,000 tons through Lotte Group Chairman Shin Dong-bin's network. Of those 19,000 tons, Lotte Fine Chemical imported total of 12,000 tons of urea from Vietnam, Saudi Arabia, Japan, Russia and Indonesia.

In addition, it secured 6,500 tons from China and 700 tons from the Korean government.

The amount is enough to manufacture 58 million liters of urea water, which is enough for two to three months of urea supply for diesel vehicles in the country.

In particular, 1,000 tons were directly through obtained Shin from his connections with Mitsui Chemicals Japan.

POSCO International also secured 180,000 liters of urea water from overseas.

POSCO International announced recently that it has signed contracts with Blue Nox of Australia to obtain 80,000 liters of urea water and with Zar Kruse of Mexico to obtain 100,000 liters, enough to supply 9,000 vehicles. All of the quantities secured are scheduled to be shipped to the country by the end of this month.

POSCO International said that neither company had experience in exporting urea water, so it decided to carry out the overall export business directly, from local export customs clearance to packaging and logistics.

"Even after this contract, we will continue to negotiate with urea water producers in Asia, the Commonwealth of Independent States (CIS) region and the Americas on whether to supply urea water," a POSCO official said. "We will actively participate so that this issue can be resolved as soon as possible."

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