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South Korea reports some relief to acute urea shortage but seen as temporary fix

Reuters
South Korea reports some relief to acute urea shortage but seen as temporary fix

UREA. People wait in line to get urea in Iksan, South Korea, November 9, 2021.

Yonhap/Reuters

South Korea nearly entirely relies on China for urea. Seoul says it will continue talks through diplomatic channels to ensure stable supply.

South Korea’s foreign ministry said on Wednesday, November 10, it had secured enough urea, used in diesel vehicles and factories to cut emissions, from China to cover demand for three months amid an acute shortage threatening to halt transport and industries.

But until Beijing relaxes a customs control that effectively halted exports of urea to boost domestic supply, the shortage in South Korea, which nearly entirely relies on China for supply, is bound to persist, experts and industry sources said.

A previously contracted supply of 18,700 tons of urea will proceed through customs having completed required inspection by Chinese authorities, the South Korean foreign ministry said.

It said it will continue to work with China through diplomatic channels to ensure stable supply.

The sudden acute shortage of urea at gas stations has seen diesel vehicle drivers panic buy and industry officials say the inventory of urea for factories is low. Approximately 2 million diesel vehicles, mostly cargo trucks, are required by government to use the additive, according to industry experts.

South Korea has scrambled to secure supply, this week flying a military oil tanker to Australia and diversifying the sourcing to other countries, but industry officials say the measures remain a temporary fix at best.

“Today’s announcement from the foreign ministry does not specifically address when and how much of urea China will export at once,” said Lee Hang-koo, an executive adviser at Korea Automotive Technology Institute, adding that a shortage of shipping containers would likely become another challenge to deliver much-needed urea to South Korea in time.

“It is like a whack-a-mole that will not end until China removes its export restrictions on urea…. The supply chain management is very complicated and there is no quick fix for this urea situation,” said Lee.

Nearly 97% of South Korea’s urea imports came from China between January and September, according to the trade ministry.

The supply of 18,700 tons of mass urea translates to about 56,100 tons of urea fluid solution, which experts say could last up to three months.

A presidential Blue House official told reporters the government is doing everything it can to secure more supply but “it’s not easy to be optimistic.”

The government has released some public and military stocks as temporary measures. – Rappler.com