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[Asia Economy Beijing=Special Correspondent Jo Young-shin] The Chinese government’s export restrictions on certain chemical fertilizer items, including urea, citing national food security and other reasons, have dealt a direct blow to South Korea’s logistics industry. Beyond the shortage of urea solution, the entire Korean logistics industry is facing an all-stop crisis.

According to Chinese media on the 4th, the General Administration of Customs of China changed the export quarantine management method for a total of 29 chemical fertilizer items, including urea, on the 15th of last month. For these 29 fertilizer items, export is only possible with government approval. The change in export quarantine management effectively amounts to export regulation measures.

[Image source=Yonhap News]

Among the 29 items, the one directly affecting South Korea’s logistics industry is urea. China is the world’s largest urea producer, exporting 5 million tons annually. As of September, China’s urea export value increased by 104.9% year-on-year to $1.52 billion. Export volume was recorded at 4.024 million tons, up 37.3% from the same period last year. Of this, 564,000 tons were exported to South Korea. South Korea accounts for 14% of China’s total urea export volume. India imports about half of China’s urea volume.

The Chinese government’s export suppression of 29 fertilizer items, including urea, stems from protecting its domestic industry. International prices of key raw materials for chemical fertilizers such as natural gas, sulfur, and coal have surged, causing domestic chemical fertilizer prices in China to soar. Additionally, power shortages due to coal scarcity have intensified, leading to reduced production and disruptions in urea and chemical fertilizer manufacturing. It is known that inventories are almost depleted due to supply-demand imbalances. Since fertilizer price increases directly affect farmers, it appears the Chinese government blocked exports of urea and other chemical fertilizers.

The KOTRA Beijing Trade Center explained that in the second week of October, China’s urea production operating rate was 67.24%, and the average daily production was 149,000 tons, down 5.6% and 4.1% respectively compared to the same period last year. As of September, the export price of urea exceeded $400 per ton, compared to $250 per ton during the same period last year.

KOTRA Beijing Trade Center also noted that the Chinese government has implemented various policies and measures since September to suppress chemical fertilizer price increases and secure sufficient supply ahead of winter wheat cultivation.

In fact, since September, the National Development and Reform Commission of China has introduced policies such as ▲rail freight discounts for water-soluble fertilizers ▲ensuring stable production of chemical fertilizer manufacturers in the metropolitan area during the autumn and winter air pollution control period ▲maintaining stability of agricultural electricity rates ▲measures to stabilize chemical fertilizer supply volume and prices.

Given that the NDRC has continuously announced policies hinting at export restrictions on urea, there are criticisms that the South Korean government’s preemptive response was insufficient.

Since China’s export regulations on 29 items including urea were implemented from the perspective of protecting domestic farmers and food security, the shortage of urea solution in South Korea is expected to continue for the time being.

Meanwhile, the major chemical fertilizer export countries from China (based on cumulative export value as of September) are India ($1.5035 billion), Brazil ($1.42123 billion), Pakistan ($455.78 million), Vietnam ($379.41 million), Argentina ($376.78 million), and Australia ($361.25 million). It is expected that primary industries in some countries such as India will be affected by China’s chemical fertilizer export restrictions.

This content was produced with the assistance of AI translation services.