The rise in tensions between China and Australia is hitting other countries as China restricted exports of raw materials essential for various industries.
Recently in South Korea, there have been voices raising concerns over China’s curb on Urea exports. The drivers of diesel engine vehicles such as cargo trucks said it can lead to a logistics crisis in the worst case.
Drivers of cargo trucks in South Korea are concerned as supply of Urea can be found in South Korea stores, but owners would not sell as the price keep surging.
Urea water is a component that converts the nitrogen oxide into water and nitrogen. It is an essential material for selected catalytic reduction system, a pollutant reduction device on trucks, and even for passenger cars that run in diesel.
Among the 3.3 million diesel trucks operating in South Korea, more than 60% need Urea water to hit the road. But, due to a supply crunch, the price nearly doubled in just two weeks and it is keep on soaring.
The price of Urea water soared from 12,000 won ($10.16) to 20,000 won ($16.93) currently. With a supply shortage, the price will continue to surge. In some online shopping malls, it’s being sold at around 50,000 – 100,000 won ($42.33 – $84.65) due to panic buying. If such crisis continues, South Korea may completely run out of Urea water by next month (December 2021).
Now, you may ask, what exactly is leading to the supply shortage?
More than two-thirds of the Urea imports in the country are from China. China has been producing Urea water by extracting ammonia from coal but due to a trade war with Australia, it began to restrict the exports of raw materials since last month (October 2021) mandating pre-export inspections on Urea water.
Experts say in the worst case scenario, this can lead to a logistics crisis since the trucks will not be able to operate normally.
Freight forwarders in South Korea are among the hardest hit. Normally, passenger cars are okay with fueling up once in 2-3 months, but freight vehicles need to refill their Urea tanks after just 1 or 2 round trips.
In order to ease the crisis, South Korean government is currently considering importing Urea water from other countries such as Russia or even negotiating with the Chinese government for swift export procedures. It seems like the fight to secure Urea water will continue for a while.
