[War & Business] Urea Shortage Phenomenon

Industrial urea produced by Ningxia Baofeng Energy, one of China's largest chemical companies, being loaded. [Image source= Ningxia Baofeng Energy official website]

[Asia Economy Reporter Hyunwoo Lee] The resource "urea," which has recently gained renewed attention due to the urea solution shortage, is literally a substance found in urine. Mammals, including humans, typically dilute ammonia produced in the digestive system with water when generating urine, and this naturally occurring substance is called urea. Human urine, excluding water content, is roughly a 5% diluted urea solution.

Since ancient times, urea has been recognized as an essential fertilizer for agriculture along with nitrogen. Before the discovery of chemical fertilizer production methods, it was mainly obtained from natural fertilizers fermented from human or animal excrement, making it difficult to acquire. In particular, in the Middle East, where the population and livestock numbers were limited, it was so precious that large bird nests were built throughout rural areas to collect bird droppings as well.

Urea came to be perceived as a simple consumable item today after the development of chemical processes extracting ammonia from coal and natural gas. Currently, the global urea production market is divided between major coal-producing countries like China and natural gas-producing countries such as Russia and the Middle East, with the Asian urea market dominated by Chinese-made urea.

However, recently, as China’s coal shortage crisis deepened, a shortage of urea also occurred. China, heavily reliant on coal-fired power plants, faced severe power shortages due to the coal shortage, and ammonia extraction plants struggled to operate, significantly reducing production. South Korea, which depended on China for more than 97% of its vehicle urea solution imports, was hit directly.

What made South Korea’s urea solution crisis more severe globally was the lack of any alternatives prepared in response to the worsening supply situation in China. The last domestic urea production plant was shut down in 2011 as part of rationalization policies, and there has been no discussion of diversifying imports from other urea-producing countries such as the Middle East, Southeast Asia, or Australia.

If the supply shortage prolongs, concerns are rising that not only logistics chaos but also food prices will surge simultaneously. Although vehicle urea solution accounts for only about 10% of total urea imports, more than half of the total urea is actually used for agricultural fertilizer production. Fortunately, South Korea, which has a winter farming off-season, is not yet in a critical situation, but in South Asian countries like India, where there is no winter, fertilizer shortages have already led to widespread fertilizer looting in various regions.

As such urea supply crises can occur at any time in the future, urgent measures are needed to reduce excessive import dependence on China. The government is hoped to properly recognize that securing a stable supply of essential strategic resources is the real form of disaster support.

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