Seoul forms task force to address urea water solution crisis as security issue

Construction equipment that need urea water solution for operations are parked at a construction site in Goyang, Gyeonggi Province, on Thursday. Urea water solution is essential in reducing diesel engine pollutants. Excavators and concrete mixers use diesel engines. [Photo by Han Joo-hyung]

(Updated with additional information)

The presidential office Friday has formed a task force to command government-wide endeavors to address urea water solution crisis following China’s export curbs as it is feared to bring a standstill to the recovering economy since Korean trucks and heavy duty vehicles entirely rely on diesel fuel.

“The government will address the affair with the equal urgency as in the IT components crisis (from Japanese export curb) through comprehensive networking with economy and foreign ministries and related industries,” said Park Soo-hyun, presidential spokesman in a press statement.

The government will watch the condition around the clock until supply normalizes, he added.

The issue was also discussed at the National Security Council meeting on Thursday.

China, world’s largest producer of urea, has imposed export restrictions on urea water solution and other raw materials amid trade conflict with Australia. The urgent concern is a standstill in freight truck operations if the fuel stock runs out.

Despite strong demand for shipping from recoveries at home and abroad, ground transportation has become difficult as truck partners are rapidly running out of stock. Companies may have to turn to rail or sea transportation.

Urea water is essential in curbing emissions in diesel-fueled vehicles. About 2 million out of 3.3 million diesel-powered trucks registered in Korea rely on the solution which is mixed in Korea after importing urea, 98 percent of which comes from China.

Steelmakers that use urea water solution to reduce nitrogen oxide are also on alert and devising contingency plans. Automakers fret additional shipment disruption on top shortage of chips as they use large trucks to transport new vehicles from factories to ports for exports and retail outlets.

Diesel carmakers are affected as new cars are loaded with a certain amount of urea water solution. An unnamed official from an automaker noted that his company has secured months-worth urea water solution for new cars but it could face problems if current situation continues.

Lotte Fine Chemical, the largest producer of vehicle-use urea water solution in Korea, has been receiving calls from steelmakers and cement producers about where they can buy industrial urea water solution. Steelmakers and cement manufacturers use coal for factory generation and urea water solution to reduce nitrogen oxide.

Lotte Fine remains the sole supplier of urea water solution, but it relies on imported urea water as it stopped producing it from 2014.

Logistics companies like CJ Logistics, Hyundai Glovis, and Hanjin with overseas network are putting out efforts to secure urea water solution, said an unnamed official from Korea Integrated Logistics Association. They have been receiving increasing reports of mal-operating trucks this week.

Industry insiders noted that lingering shortage could delay freight truck-based delivery, although for now, companies like EMart and Coupang have secured some amount of urea water solution.

The supply shortage is also affecting construction sites as heavy equipment like excavators, bulldozers, and dump trucks all use diesel engines. A halt in truck operations could lead to suspension in supply of construction materials.

Of the 3.3 million diesel freight trucks in Korea, 355,853 trucks are dedicated to outside cargo operations while the remaining 2.97 million trucks are owned by companies and self-employed businesses in retail and logistics industries. Major manufacturers like Samsung Group, Hyundai Motor, and LG Group also transport raw materials and products via their own logistics companies.

Jeon Hyung-pil, head of logistics policy at the Ministry of Land, Infrastructure, and Tranposrt, said that the government is surveying companies on the number of trucks they operate to minimize industry shock due to supply shortage.

The government, meanwhile, said Thursday it is cracking down on panic buying and cornering and hoarding of urea water solution. Vice Finance Minister Lee Eok-won said that the government will give notice next week on a ban on any hoarding activity.

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