Urea is an important industrial raw material and agricultural fertilizer, and for a highly industrialized and agricultural country like South Korea, the supply of urea is related to the stability and development of the national economy. However, some time ago, the General Administration of Customs of China announced the suspension of the customs clearance process for Chinese companies to export urea solutions to South Korea, which triggered strong reactions and concerns from the South Korean government and enterprises. Why did China suddenly cut off urea supplies to South Korea, and how will South Korea respond to this crisis?
The reason for the cut off of urea supply in China
China is the world's largest producer and exporter of urea, and exports a large amount of urea solution to South Korea every year, mainly for automotive exhaust purifiers and industrial urea. South Korea's dependence on China is as high as about 90% for industrial urea, which is mainly used for automotive adhere. Why is China suspending urea exports to South Korea?
Due to the tight supply of urea solution in China, exporters were unable to complete orders on time, and had to suspend exports to South Korea in order to ensure the demand of the domestic market. This is related to China's strengthening of environmental protection in recent years, strict control of emissions from the chemical industry, and the impact of the new crown epidemic and energy crisis, which has led to higher production costs and lower supply of urea.
China is also facing an increase in domestic demand for urea, especially in winter, when urea solutions are widely used for snow removal and frost protection, and in spring, urea is used in large quantities for agricultural production. Therefore, China's cut off urea supply is not for political purposes, but based on the regulation of the market and supply and demand.
South Korea's dilemma
China's supply cut is undoubtedly a heavy blow to South Korea, and the South Korean government and companies have to face the urgent need for urea supply, as well as the possible economic losses and social impacts. The South Korean government has convened two emergency meetings to seek countermeasures. South Korean officials said that the current domestic inventory of urea solution can last for three months, but if imports cannot be resumed in time, it will face a serious shortage.
The impact of the urea shortage on South Korea is mainly reflected in two aspects: one is the automotive industry, and the other is the chemical industry. The automobile industry is a pillar industry in South Korea, urea solution is an important component of automobile exhaust purifier, if the lack of urea solution, it will lead to the failure of the emission standards of the car, affecting the performance and environmental protection of the car.
The chemical industry is another important industry in South Korea, urea is the raw material for many chemical products, such as urea formaldehyde resin, urea ammonium nitrate, urea phosphate, etc., if there is a lack of urea, it will affect the production and quality of chemical products. The shortage of urea may also cause problems such as rising prices, logistics difficulties, and social unrest, which will have a greater impact on South Korea's economy and society.
South Korea's response strategy
In the face of China's supply cuts, the South Korean government and companies have sought other sources of imports, accelerated domestic production, reduced urea consumption, and engaged in dialogue and cooperation with China. The South Korean government and companies are trying to import urea solutions from other countries to ease supply pressures.
According to Korean media reports, South Korea has imported some urea solutions from India, Indonesia, Vietnam and other countries, but the quantity is limited and the price is also high. The South Korean government and companies have accelerated the production of domestic urea solutions to meet domestic demand. According to Korean media reports, there are currently two urea solution production enterprises in South Korea, with an annual production capacity of about 300,000 tons, which is far from meeting domestic consumption. The South Korean government plans to invest in the construction of a new urea solution production facility to increase the country's self-sufficiency rate.
The Korean government and companies have reduced urea consumption to conserve resources. According to South Korean media reports, the South Korean government has asked car manufacturers and transportation companies to reduce the use of urea solution, and at the same time, the South Korean government has also encouraged people to use public transportation to reduce vehicle emissions. The South Korean government and businesses have engaged in dialogue and cooperation with China to resume urea imports.
According to South Korean media reports, the South Korean government has proposed to China's relevant industrial departments to activate supply chain dialogue channels, hoping that the two countries can continue to smoothly promote supply chain cooperation. At the same time, South Korean companies are also maintaining close communication with Chinese urea suppliers and look forward to resuming normal trade relations as soon as possible.
epilogue
China's urea supply cut has brought great challenges and difficulties to South Korea, and the South Korean government and companies have taken various measures to minimize the impact of the crisis. The incident also exposed South Korea's over-reliance and vulnerability on urea supplies, and reminded South Korea of the complexity and importance of its relationship with China.
South Korea should learn from this experience, adjust its industrial structure and diplomatic strategy, and seek a more balanced and sustainable development path.