South Korean Urea prices on an upward rally amid huge shortage of supplies
- 12-Jan-2022 12:53 PM
- Journalist: Yage Kwon
Rising inflationary pressure is already a major concern for everyone on the globe, while rising fertilizers prices is putting up an extra burden on consumers’ plate. Similar to international market, South Korea has been battling with high fertilizer cost, where crippling availability of Urea has now become a prime concern for the country. Since past three months, Urea prices have been skyrocketing on the back of low imports amid high global and domestic demand.
This huge shortage of Urea in global market is not appeared out of nowhere, banned exports for Urea from China remained a major reason behind this huge shortfall. Dual energy policy in China was already compelling manufacturers to practice production cuts, while domestic demand for fertilizers were high for the country. Thus, to counter this issue, China imposed ban on export of several fertilizers including Urea. China carries a very large share of exports for Urea in Asian market, exports ban induced an extreme unavailability for the product across APAC region.
Urea is not only important for agriculture sector in South Korea but also a very useful raw material for several downstream chemicals. South Korean truckers are also concerned with the shortage, as Urea is an important additive for diesel combustion engines, thus they will not be able to start their trucks without Urea. Consequently, unavailability of Urea is affecting South Korea by more than one way, as it will also shoot up transportation cost and put an additional burden on consumers.
As per ChemAnalyst analysis, availability of Urea is unlikely to get restored any time soon in the global market, and several factors are supporting this fact. Beijing winter Olympics has already imposed production cuts on several domestic industries, while spring festival during February in China will further stretch this ban imposed on fertilizers. Consequently, Urea prices will take time to show any significant ease in South Korean market.