Government to Manage 20 Key Items Including Magnesium... Early Warning System Activated

Up to 200 Core Items Selected by This Year... Discovery Until Q1 Next Year

Lee Eok-won, First Vice Minister of the Ministry of Economy and Finance, presides over and speaks at the 11th joint inter-ministerial response meeting on urea solution supply held at the Government Seoul Office Building on the 18th. (Photo by Ministry of Economy and Finance)

[Sejong=Asia Economy Reporter Moon Chaeseok] The government announced for the first time since the shortage of urea solution caused by China that "the market is stabilizing." It designated 20 key items with high external dependency, such as magnesium and tungsten, as priority management targets and decided to introduce an early warning system that operates when urgent management is needed starting next week. The plan is to increase the number of key items to be managed to up to 200 by the end of the year.

On the 18th, the government held the 11th inter-ministerial joint response meeting on urea solution supply and demand, chaired by Lee Eokwon, the 1st Vice Minister of Strategy and Finance, at the Government Complex Seoul. The government evaluated, "The production volume of the five major companies continuously exceeds the daily average consumption of urea solution, about 600,000 liters (ℓ), creating an atmosphere of market stabilization." It explained, "As of the 17th, the inflow and sales volume at about 100 key distribution gas stations maintain about two-thirds of the daily average consumption, indicating that the overall supply and distribution at key distribution gas stations are also stabilizing." As of the 17th, the inflow of urea solution at key distribution gas stations was 334,000ℓ, sales volume was 389,000ℓ, and inventory was 217,000ℓ.

Urea solution is a liquid chemical used to reduce nitrogen oxides (NOx) in diesel vehicle exhaust gases. On the 15th of last month, the Chinese government mandated pre-export inspections on urea, the raw material for urea solution, effectively halting imports of Chinese urea and causing a shortage domestically. Since then, the government has requested rapid inspections from China and secured urea and urea solution from various countries in cooperation with private companies.

However, the amount of urea solution circulating in the market is still far from sufficient. The government previously announced it would prioritize supplying 1.8 million ℓ of urea solution to about 100 key gas stations, but from the 12th to the 17th, a total of 1,127,000ℓ was supplied. Based on the total supply volume estimated from the Ministry of Environment’s reporting system, the amount of urea solution supplied to gas stations other than key distribution stations was 50,000ℓ each on the 13th and 14th, but gradually increased to 290,000ℓ on the 15th and 300,000ℓ on the 16th. Private companies have reportedly signed contracts to additionally import 320 tons (t) of automotive urea from Russia and 1.5 million ℓ of automotive urea solution from the United Arab Emirates (UAE).

Starting next week, the government plans to operate a national-level early warning system targeting items with high external dependency to prevent a "second urea solution crisis." The government explained, "We will establish a system that immediately notifies relevant domestic ministries when unusual events occur in production or export in exporting countries by utilizing overseas networks such as diplomatic missions and KOTRA. We will classify target items according to external dependency and urgency of management, and shorten inspection cycles for items with higher risks."

Within this month, the government will establish a pan-government economic security key items task force (TF) chaired by Vice Minister Lee and designate key items with high urgency for management among 3,000 to 4,000 items with high external dependency. The government announced that 20 items directly linked to core industries, such as magnesium, tungsten, neodymium, and lithium hydroxide, have been selected as priority management targets. Response plans for these items are being discussed mainly at the inter-ministerial joint response meetings on urea solution supply and demand. The number of key items will first be designated between 100 and 200 by the end of the year and further identified by the first quarter of next year. The government plans to comprehensively consider factors such as domestic economic impact, external dependency, short-term urgency, and the possibility of switching import sources or domestic production. The government stated, "For key items, we will prepare diversified and customized supply stabilization measures such as expanding stockpiles, diversifying import sources, switching to domestic production, and international cooperation."

Through designation as emergency supply adjustment materials, the government plans to expand stockpiling by the Public Procurement Service for rare metals and other materials and prepare measures to support storage costs if the private sector holds additional inventory from an economic security perspective. For items with realized supply risks, the government will promptly secure alternative import countries and consider supporting logistics costs for companies, applying tariff quotas, and expanding import financing support. The government also plans to expand the domestic production base for advanced and general-purpose items and establish an inter-item mutual exchange system through international cooperation.

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