SEOUL, Dec. 6 (Korea Bizwire) – South Korea’s industry ministry said Wednesday it is reviewing giving subsidies to companies that seek to diversify supply channels of urea amid concerns over another urea supply crisis due to China’s export halt.
Last week, China suspended customs procedures for urea shipments to South Korea. Seoul officials have said the move appears to have been made due to tight supplies for domestic use in China, though it was not a formal export curb.
“South Korea currently has urea inventory sufficient for more than three months,” First Vice Industry Minister Jang Young-jin said during a meeting with urea importers.
“The government is reviewing giving subsidies to companies when they seek to diversify import channels, and it plans to jack up the state inventory dramatically,” Jang said, calling on people to refrain from panic buying.
Major companies have already secured alternative suppliers and are able to have additional shipments so that any repeat of the urea supply crisis seen in 2021 is unlikely, the official said.
In 2021, South Korea suffered major disruptions to urea supplies, as China halted its exports amid a trade dispute with Australia.
Lotte Fine Chemical Co., which supplies half of South Korea’s urea demand for industrial use, said the company has already secured various import channels in Vietnam and other Southeast Asian nations, as well as in the Middle East.
It recently secured 5,000 additional tons of urea from Vietnam, making the country’s total urea inventory enough for 3.7 months from last week’s volume that was enough for three months.
South Korea is heavily dependent on China for its urea supplies, importing more than 90 percent of urea for diesel vehicles and other industrial purposes from the country this year, according to the data by the Korea Customs Service.
The figure marked a growth from 71.8 percent the previous year, as companies have turned to China again for cheap imports.
The proportion of Chinese urea for fertilizers also rose from 18.3 percent in 2022 to 22.5 percent this year, the data showed.
Urea is a type of nitrogen used to curb emissions in diesel cars and to make agricultural fertilizers, and China is the world’s largest producer of the material.