China blocks customs clearance of elements bound for Korea… Will there be another ‘urea crisis’?

Ahead of the shipment of urea from China to Korea, Chinese customs suddenly blocked the shipment to Korea, raising concerns that the ‘urea crisis’ that occurred in Korea two years ago may be repeated.

As a result of coverage by the Kyunghyang Shinmun on the 3rd, relevant ministries such as the Ministry of Strategy and Finance, the Ministry of Trade, Industry and Energy, and the Ministry of Foreign Affairs held an emergency inspection meeting on the import of Chinese elements on the 1st. This is because there was a report that ‘the General Administration of Customs of China is preventing the shipment of elements that have completed customs inspection.’

Urea, manufactured from ammonia extracted from coal, is used in agricultural fertilizers, diesel vehicle emission reduction devices, and coal power plant carbon reduction devices. For this reason, a shortage of elements can affect not only vehicle operation but also the industry as a whole. In particular, domestic companies’ dependence on Chinese elements reaches 90%, so if there is a problem with element imports, it is inevitable.

Previously, when China regulated urea exports in October 2021, a shortage of urea occurred in Korea, which depended on China for 97% of its imports at the time, causing great confusion. The government later pursued diversification of urea import sources, but the proportion of Chinese urea imports fell from 71.2% in 2021 to 66.5% the following year, but soared again to the 90% range this year.

An official from the Ministry of Trade, Industry and Energy said, “On the 1st, we received a report from a company (that failed to ship urea),” and added, “The government has officially inquired with the Chinese government through various channels about the current situation and the reason.” The government plans to hold a meeting on the 4th to jointly determine the status of urea imports between the public and private sectors and prepare future measures.

Last September, there were reports that China would stop exporting urea for fertilizers. At the time, the Ministry of Strategy and Finance said, “The Chinese government has not taken any official export control measures for fertilizer urea,” and added, “In the case of fertilizer urea, import diversification is taking place and prices are stabilizing downward, so there will be no problem with supply and demand.”

Urea is largely classified into automotive and agricultural purposes and is imported in granular form. Unlike automotive urea, which is imported as raw material, agricultural urea is different in that urea granules are coated to facilitate use as fertilizer. Uncoated elements clump together over time, making it difficult to make urea water. In Korea, we mainly import elements from China, which are located at the shortest distance and are therefore inexpensive to import.

It is reported that Korea is currently stockpiling enough urea raw materials to produce urea water for the next three months. If urea is stored for a long time, its marketability deteriorates, so only the quantity needed for about 3 months is stored. Nevertheless, major urea water companies, including Lotte Fine Chemical and Goldstar E&C, are closely watching China’s movements. A company official said, “We are assessing the situation internally,” and added, “By diversifying our imports of elements, we have enough elements to respond so far.”

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