A truck driver fills his truck with urea water along a road near Incheon Port, Monday, while the Chinese government halted the clearance of industrial urea exports to Korea. Yonhap
The government is on alert over the possibility of another urea shortage crisis following China's sudden hold on the customs clearance of industrial urea exports to Korea, the industry ministry said Monday.
Officials explained that the delay in urea customs clearance in China is not due to political reasons, but stems from increased demand there, adding it conveyed its concerns to China and requested a swift resumption of exports.
On Nov. 30, China Customs, which is equivalent to the Korea Customs Service, suddenly put on hold the exports of industrial urea that a Chinese company was trying to ship to a Korean company, according to the government.
Urea is essential for reducing emissions from diesel vehicles and producing agricultural fertilizer when mixed with water.
When China regulated the exports of urea in October of 2021, there was a significant disruption here because Korea relied on China for 97 percent of urea imports. Since then, the government diversified its import sources for urea and reduced the dependence on China to 66.5 percent in 2022. But the level of reliance increased again to over 90 percent this year.
The government believes that the possibility of a repeat shortage is low, since there is a three-month supply of inventory currently in Korea.
"We confirmed that there was a delay in urea clearance in China. After checking various routes, we confirmed that there was no political motive," Choi Nam-ho, a spokesperson for the Ministry of Trade, Industry and Energy, told reporters during a briefing. “We confirmed that the delay in customs clearance occurred because the demand for urea is tight internally in China.”
Trade Minister Ahn Duk-geun, left, poses with Wang Shouwen, vice minister of commerce of China, during their meeting in Beijing, Monday. The trade ministry said the minister urged his counterpart for immediate action from the Chinese government in response to the customs clearance suspension of urea. Courtesy of Ministry of Trade, Industry and Energy
Trade Minister Ahn Duk-geun also expressed his concerns about the hold on urea clearance at the Fifth Korea-China Free Trade Agreement (FTA) Joint Committee meeting held in Beijing on Monday.
In preparation for a potential urea shortage, the government also held a response meeting with companies in the related industry that day.
At the meeting, the government checked the inventory status of urea for vehicle use and problems domestic companies are experiencing with customs clearance in China. Also, they discussed securing urea through alternative import sources, such as Vietnam, and agreed to quickly respond together to stabilize supplies for vehicles.
The government will tap into state reserves of urea, while businesses will secure additional volumes from countries other than China.
"Having built a response system for the urea supply chain crisis with the industry, we will respond quickly and thoroughly with related agencies to ensure there will be no disruptions in urea supply," Lee Seung-ryeol, director of the industrial policy office at the industry ministry, said.
Lawmakers also urged the government to quickly launch countermeasures to prevent the issue from affecting the local industry.
"As China's customs blocks the exports of urea entering Korea, concerns are growing that the urea shortage we experienced two years ago may be repeated," Rep. Kim Gi-hyeon, leader of the ruling People Power Party, said during the party's Supreme Council meeting, Monday. “The government should not only assess the situation, but also explore various measures to ensure a smooth supply of urea.”