The government has decided to import an additional 5,000 tons of urea from Vietnam and boost the inventory of the chemical from three to 3.7 months after China halted its exports. Urea is added to diesel vehicles to convert dangerous nitrogen oxides into harmless nitrogen gas and water. The government insists there will be no repeat of the crippling shortage in 2021 that grounded delivery trucks across the nation because import sources have been diversified to the Middle East and Southeast Asia. But already, drivers are hoarding urea and the price almost tripled over the past month. Korea still depends on China for 91.8 percent of urea for vehicles and 22.5 percent for fertilizer.
What is even more serious is the fact that Korea's dependence on China has in fact worsened over the last two years, rising from 71 percent in 2021 to 91 percent this year after falling temporarily to 67 percent in 2022. The reason is the low cost, but Korea's economy takes a huge hit every time China limits exports, which makes it imperative to secure reliable sources elsewhere even if the cost should rise.
Japan does not have the same problem, partly because there are fewer diesel vehicles in use, but more fundamentally because it produces enough ammonia to meet 78 percent of its own needs. Four Japanese companies can produce 91,000 tons of urea, and the remaining 22 percent is imported from Indonesia.
But Korea stopped producing urea in 2011 after Lotte Fine Chemical shut down its plant here saying it was unprofitable. The government has promised to slash import taxes on urea from countries other than China and expand inventory, but a more fundamental solution is required. Korea needs to lower dependency on China, diversify import sources and consider resuming production at home.
