Blocked even after customs inspection of urea
Concerns over 'Second Urea Crisis' arise
Government "Consulting with Chinese government, securing 3 months' stock"
91% of urea imports from China
Recently, China has partially restricted the export of urea to South Korea, triggering a 'red light' for domestic urea supply. Although two years have passed since the 2021 'urea crisis,' concerns are rising that supply disruptions may occur again due to the failure to diversify import sources.
According to the government on the 3rd, related ministries including the Ministry of Economy and Finance, Ministry of Trade, Industry and Energy, Ministry of Foreign Affairs, Ministry of Environment, and Public Procurement Service held an emergency inspection meeting on the 1st regarding the import of Chinese urea. An official from the Ministry of Trade, Industry and Energy stated, "We received reports from companies that export customs clearance for vehicle-use urea from China is being delayed. Therefore, we held a related ministries inspection meeting last week and are currently communicating with the Chinese side through diplomatic channels."
According to companies based in China, concerns have been mounting since November that customs authorities are holding back urea shipments destined for South Korea during the Chinese customs clearance process. Recently, the Korea Customs Service received reports from Korean companies in China that the General Administration of Customs of China, equivalent to Korea's customs authority, is preventing the shipment of urea that has already passed customs inspection. It is unusual for goods that have completed customs inspection to be blocked by Chinese customs. It is known that some of the companies affected include major domestic corporations.
The government, which experienced the urea crisis two years ago, immediately began assessing the situation. Through various channels, the government has officially raised the issue with the Chinese government to understand the current situation and reasons. The government is requesting the Chinese side to release the urea shipments blocked at customs. The Chinese government reportedly conveyed to the Korean government that "there have been no official measures." However, it is understood that they have not yet responded to the Korean government's inquiry about the reasons for blocking the shipments.
Within the government, there is speculation that the current Chinese customs hold on urea is not a formal export control measure but rather a step considering domestic supply conditions in China. An official from the Ministry of Trade, Industry and Energy said, "We recognized the delay in urea imports on the 30th of last month," adding, "We held an emergency inspection meeting to assess the situation and requested related positions from the Chinese government through various channels including the embassy in China, but there has been no response."
The government maintains that there is no need to worry about a supply crisis like in the past as additional stockpiles have been secured. Currently, about three months' worth of inventory is secured, including urea and vehicle-use urea imports from countries other than China such as Vietnam and Japan. An official from the Ministry of Trade, Industry and Energy stated, "We currently have more than three months' worth of stockpiles, so there will be no supply issues until early March next year," and added, "Since we have already secured alternative sources from more than ten countries since 2021, there will be no supply problems even if imports from China are restricted."
South Korea still relies heavily on China for most of its urea imports. According to the Korea Customs Service, the share of Chinese urea imports accounted for 91% up to October this year. After dropping to 67% last year, the proportion of Chinese urea imports has significantly increased this year, exceeding 90%. This is due to the higher price competitiveness of Chinese urea compared to imports from other countries including Vietnam.
A government official said, "We plan to closely consult with the Chinese government to ensure that the contract volumes already signed between our companies and Chinese companies are delivered as scheduled," adding, "We will promote multifaceted efforts to support the diversification of import sources for the industry, enhance government stockpiling of vehicle-use urea, and secure domestic demand volumes without disruption to stabilize the market."
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