Government forecasts project sustained growth in domestic urea demand through the mid-2030s. (Yonhap)
SEJONG, South Korea, March 26 (Korea Bizwire) — The South Korean government announced on Tuesday plans to expand its strategic stockpile of automotive-grade urea and diversify import sources to prevent future supply disruptions.
The move comes as part of broader efforts to strengthen the nation’s industrial supply chains under growing geopolitical and trade uncertainties in 2025.
During a meeting of the Supply Chain Stability Committee, presided over by Deputy Prime Minister and Finance Minister Choi Sang-mok, the Ministry of Economy and Finance unveiled a two-pronged strategy: expanding urea reserves and reducing reliance on China, Vietnam, and Japan — currently the country’s primary suppliers.
Government forecasts project sustained growth in domestic urea demand through the mid-2030s. However, supply vulnerabilities remain acute, given transportation costs and the concentration of imports from just three countries.
After weighing options between domestic production and enhanced storage with diversified imports, officials opted for the latter, citing cost-effectiveness and greater policy flexibility.
Trucks carrying 5,500 tons of urea imported from Vietnam that were heading to a factory in Ulsan, 299 kilometers southeast of Seoul in 2023. (Image provided by Lotte Fine Chemical Co.)
The plan includes expanding the Public Procurement Service’s urea reserves and subsidizing storage costs for private warehouses. In addition, the government will offer financial support to offset price differences when importing from new suppliers in the Middle East and Europe.
The target is to maintain stockpiles sufficient for at least two months and secure additional imports equivalent to five months of annual demand.
The initiative is expected to cost between 5 billion and 7 billion won annually, with total expenditures projected to reach up to 250 billion won over the next 20 years. The government stated that these measures would be reflected in the 2026 budget proposal.
In tandem with the urea strategy, the ministry also outlined a 10 trillion won supply chain stabilization fund for 2025.
The fund will focus on supporting domestic manufacturers of key materials and components critical to economic security, including electric vehicle batteries, semiconductors, and cathode materials.
The plan calls for providing capital and working funds to domestic producers, strengthening shipping and logistics capacity for essential imports, and expanding credit guarantees for small and medium-sized enterprises through a new “supply chain priority guarantee program.”
The government also announced plans to establish a dedicated investment division to manage the fund, alongside legislative efforts to amend the Supply Chain Stabilization Act. Proposed revisions will allow the Export-Import Bank of Korea to contribute to the fund and include legal protections for public officials overseeing fund operations.
As South Korea looks ahead to 2026, these measures reflect an aggressive push to insulate the country’s core industries from global supply shocks and to bolster economic resilience in an increasingly unpredictable global trade environment.
M. H. Lee (mhlee@koreabizwire.com)
