Supply chains in Australia under threat as urea shortage hits

The shortage of urea that has pushed global fertilizer prices to unseen heights is threatening supply chains in Australia.

At least half the diesel-fueled trucks in the nation require an exhaust fluid based on urea to keep running, according to Warren Clark, the chief executive officer of the National Road Transport Association of Australia. The additive, known as AdBlue, is used in modern diesel-fueled trucks to improve air quality by cutting emissions of nitrogen oxides.

Energy shortages in Europe and China have seen heightened demand for coal and natural gas in power and heat, reducing the amount of the fossil fuels available as feedstock for fertilizer production and sending prices to record highs. Supply challenges have been heightened as major exporters Russia and China curbed fertilizer shipments, and South Korea last month even enlisted military transport planes to ship in urea from Vietnam and Australia, which is now facing a shortage.

“Our best estimate is that supplies will dry up by February but it could be much sooner,” Clark said. “The national supply chain is already under significant stress thanks to the lingering impact of Covid-19, industrial action at ports, a shortage of drivers and other factors. This could reduce road freight to a trickle.”

The National Road Transport Association is currently speaking to the government about the issue, Clark said.

Australia has more than 15 million liters of AdBlue supplies, equivalent to almost five weeks of business-as-usual demand, and multiple shipments of refined urea are on their way to the nation, providing more than two weeks of additional supply, Energy Minister Angus Taylor said in a statement. It is “unnecessary and unhelpful” if businesses and consumers buy additional stocks of the additive, he said.

“The Government is working to ensure we do not face any shortages,” Taylor said. “We are pursuing a range of measures to address global pressures in the urea market. We will keep our trucks running and Australian motorists on the road.”