Korea urges China to ease urea export curbs to prevent supply crisis

Korea has urged China to ease its recent halt on urea exports to Korea in order to prevent a repeat of the urea shortage crisis that hit the local auto market two years ago.

A customer buys bottles of diesel exhaustion fluid made of urea at a supermarket in Seoul on Monday. [NEWS1]

Korea has urged China to ease its recent halt on urea exports to Korea in order to prevent a repeat of the urea shortage crisis that hit the local auto market two years ago.

Trade Minister Ahn Duk-geun held a meeting with the Chinese Ministry of Commerce and requested that it come up with some countermeasures on the urea export restriction concerning its impact on Korea's supply chain. It comes as China's General Administration of Customs on Nov. 30 halted customs procedures for urea exports to a Korean company.

"It was confirmed that there has been a delay in the customs procedures of urea exports to Korea," said Choi Nam-ho, spokesperson for the Ministry of Trade, Industry and Energy. "The delay is due to China's prioritization of domestic supply."

Empty bottles of diesel exhaustion fluid made of urea are placed at a gas station in Goyang, Gyeonggi on Monday. [YONHAP]

Urea is a chemical compound used for producing fertilizer and diesel exhaust fluid (DEF) for diesel engines. China's export curbs on urea solutions in 2021 led to a massive supply shortage in Korea, taking a toll on diesel vehicle drivers.

Diesel cars account for about 40 percent of registered vehicles in Korea.

Korea's urea inventory is enough to last about three months, considering its planned imports from Vietnam, Japan and other countries excluding China.

The Trade Ministry held an emergency meeting with related governmental officials including the Ministry of Economy and Finance and the Ministry of Foreign Affairs to inspect the customs procedures from China and come up with measures to stabilize urea supply.

They vowed to diversify the supply chain to Southeast Asian and Middle Eastern countries while the Korea Customs Service will support quicker customs procedures.

A worker organizes inventory of diesel exhaustion fluid made of urea at a gas station in Seoul on Monday. [NEWS1]

The Korean government will also maintain constant communication with China to ensure a stable supply.

"As the government has been in close connection with companies for a response system for the urea supply chain, we will quickly react to the situation to prevent any slippage," said Lee Seung-ryeol, head of the planning team at the Trade Ministry.

China is the world's largest urea supplier. Korea imported 91 percent of urea solutions from China this year as of the end of October.

Meanwhile, shares of urea-related companies traded strongly in Korea's stock market on Monday. KG Chemical jumped 8.7 percent to 7,270 won ($5.6) while Union closed up 6.3 percent.

Lotte Chemical, the largest DEF supplier, rose 3.33 percent to close at 58,900 won.

BY SARAH CHEA [chea.sarah@joongang.co.kr]