▲ Aqueous Urea Solution (Source: Yonhap News)

Recently, China, which exports more than 90% of aqueous urea solution to Korea, imposed a de facto export ban on DEF (Diesel exhaust fluid), which began on November 15th, causing a shortage of aqueous urea solution. As a result, the logistical disturbance began at major ports across the country, and the industries that use urea solution were also in a state of emergency. Aqueous urea solution is a liquid used to reduce the amount of air pollution created by diesel vehicles. It purifies nitrogen oxides that cause fine dust in diesel cars. Aqueous urea solution is not involved in the driving of the car. Still, in countries implementing environmental regulations under the European Union's emission standards, the lack of urea is the same as running out of gas. Since Korea has also strengthened the emission standard for automobiles to improve the air environment, urea solution became necessary, as the SCR (selective catalytic reduction) system was applied to diesel vehicles after the introduction of Euro 6 in 2014.

Meanwhile, some point out that the government has had several opportunities to respond to the shortage of domestic urea solution at an earlier stage. According to the Maeil Business Newspaper report on November 11th, domestic power generation companies and related industries identified the crisis, shortly after the Chinese Government imposed export regulations on urea solution last month. Also, around the 20th of the same month, the price of urea solution had already risen, and hoarding partially occurred in the market. However, even though there was a clue to capture the crisis signal, communication between public enterprises and ministries did not work well, and they did not adequately identify market trends. According to the industry, public power generation companies that use urea solution detected a crisis in mid-October. However, the Ministry of Trade, Industry and Energy, which manages public power generation companies, belatedly recognized the seriousness of the situation. In response, public power generation companies began reviewing, 'emergency controls,' related to the supply and demand of urea solution, since November 18th, a week after China strengthened the urea export quarantine.

Fortunately, the supply of aqueous urea solution is now in the normalization stage. As the production of the nation's top five urea solution companies exceeds its daily usage, the price of urea solution is slowly decreasing. With the experience of a serious disturbance in urea solution, the government plans to operate an early warning system that can identify supply and demand trends in advance. Kim Bu-gyeom, the Prime Minister of Korea, said at an extraordinary Cabinet meeting on November 11th, "We will manage supply and demand by ordering imports, productions, and sales methods, so that quantity of materials can be efficiently supplied to the point of use, until sufficient supplies are secured." As a result, he promised to cut the tariff rate for additional import factors.

By Park Jung-hyun,cub-reporter  jhgongju0903@gmail.com

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