LOTTE Fine Chemical recently contracted for 5,000 tons of Vietnamese urea, signaling a shift towards alternatives to Chinese imports amid growing concerns over shortages in supply of diesel exhaust fluid (DEF), essential for diesel vehicles, due to disruptions in Chinese urea imports.
On Dec. 6, the Ministry of Trade, Industry, and Energy reported that LOTTE Fine Chemical has secured an additional contract with Vietnam for 5,000 tons of urea this week.
This move is a response to the supply disruptions caused by China’s unofficial export restrictions on urea due to domestic supply concerns. China currently accounts for 92% of South Korea’s total urea supply. The country had previously experienced a “urea crisis” two years ago, which disrupted truck operations due to a lack of DEF.
The shift to non-Chinese sources of urea for DEF production by companies like Lotte Fine Chemical is expected to mitigate domestic supply concerns. According to the Ministry, South Korea now has a 3.7-month supply, including existing stockpiles and contracts for non-Chinese imports, up from 3 months previously. This increase in supply comes amid expectations that China may limit urea exports until the first quarter of next year. LOTTE Fine Chemical, which accounts for 50% of domestic DEF production, is diversifying its import sources beyond Vietnam to the Middle East and Southeast Asia.