SEJONG, - In response to China's recent suspension of urea exports to South Korea, the South Korean government is set to support the partial payment of urea imports from alternative countries. Industry Minister Bang Moon-kyu announced this plan during a press meeting on Wednesday, addressing concerns about potential supply shortages and the need for a stable long-term supply.
According to Yonhap News Agency, the government aims to assist companies in purchasing urea from nations other than China to prevent a supply crisis. He assured that South Korea currently has sufficient urea supplies, with an inventory lasting for 3.7 months. However, he noted that imports from countries other than China are about 10 percent more expensive.
South Korea has traditionally relied heavily on China for its urea supply, primarily due to lower costs. Government data indicates that over 90 percent of South Korea's industrial urea imports this year were from China, a significant increase from 71.8 percent the previous year. Additionally, Chinese urea used for fertilizers also rose from 18.3 percent in 2022 to 22.5 percent in the current year.
Bang emphasized the necessity for a government-backed system to support corporate imports of urea in emergency situations, recalling the supply disruption in 2021 when China halted exports amid a trade dispute with Australia.
The government's new measures in response to China's export restrictions include doubling the state inventory of urea for diesel vehicles and releasing current government reserves. It also plans to offer subsidies to companies diversifying their urea supply sources. The finance ministry estimates that approximately 26 billion won (US$19.8 million) per year from the budget will be needed for these subsidies.
South Korea sources urea from various countries, including Qatar, Vietnam, Indonesia, and Saudi Arabia, and has the capability to secure imports from more than 12 nations.
Addressing the broader economic outlook, Bang projected that South Korea's exports would grow by 5-6 percent next year, potentially up to 9 percent, driven by a rebound in global semiconductor demand. He anticipates a rapid recovery in chip sales, leading to significant growth in key sectors like vehicles and shipbuilding.
South Korea experienced a yearlong export decline through September due to global economic challenges but saw a rebound in October with a 7.8 percent expansion in November.
The government is also planning to develop the non-memory chip sector, with measures to enhance the entire system chip ecosystem scheduled for announcement in February.
Regarding speculation about his candidacy in the April 15, 2024, general elections, Bang expressed receiving numerous requests to run but indicated his preference to continue serving in his current role. As per regulations, civil servants must resign from their positions at least 90 days before the election if they wish to participate.