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Urea shortage threatens South Korea’s transport, energy industries

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November 9, 2021

By Sangmi Cha and Heekyong Yang

SEOUL (Reuters) – South Korea is flying a military oil tanker to Australia this week to airlift 27,000 litres of urea solution, used in diesel vehicles and factories to cut emissions, amid a dire shortage threatening to stall commercial transport and industries.

Approximately two million diesel vehicles, mostly cargo trucks, are required by government to use the additive, according to industry experts.

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Diesel vehicle drivers have started panic buying urea after key supplier China last month tightened exports for its domestic market. Nearly 97% of South Korea’s urea imports came from China between January and September, trade ministry said.

“I drove about 70 kilometres to a gas station to just get urea solution for my truck and there were long lines of vehicles and my turn didn’t come, so I just left empty handed,” Lee Byung-ki, 63, told Reuters, adding he would not be able to continue working from Wednesday unless he found some urea.

The shortage is threatening to halt delivery trucks carrying gasoline and other fuels to local gas stations, an official from one of South Korea’s major refiners said.

“If gas stations do not manage to receive sufficient amount of fuel, it could attribute to jump to logistical cost across almost all industries, which eventually could burden consumers – price increases in ordinary consumer goods.”

But the shortage could have an even greater impact on South Korea’s industrial sector, which is also mandated to use urea to cut pollution or stop production.

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Of the 835,000 tonnes of urea imported in 2020, 34.7% was for industrial use, 9.8% for cars and the rest used to make fertilisers in agriculture, environment ministry said.

A major urea supplier in the country said it had not been able to import urea material from China since mid October, which had resulted in a drop in the operation rate of its urea solution production line in South Korea.

The industrial urea inventory, which keeps factories running, is already low, a source from the manufacturing industry told Reuters.

“What we could do to alleviate the urea shortage for factory operation is to ask the government to relax these environmental regulations to make it through this.”

AUTOMAKERS WORRIED

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If the urea shortage persists the auto sector, which already faces a semiconductor shortage and price hikes in raw materials, would find it difficult to get parts from suppliers, said Lee Hang-koo, an executive adviser at Korea Automotive Technology Institute.

“It could end up keeping South Korean automakers’ factories abroad from manufacturing vehicles as much as they would like to because their auto parts suppliers would not be able to deliver their parts to export ports to ship their products,” he said.

President Moon Jae-in tried to calm public fear on Tuesday, saying at a cabinet meeting there was no need for “excessive concern” and help was on the way.

The government has released urea stockpile from the public sector to areas in urgent need and said there will be a temporary release from military stockpiles.

Defence Minister Suh Wook on Tuesday said in a parliamentary committee meeting the military plans to release around half the stockpile of 445 tonnes of the automotive urea solutions to civilians as a loan.

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South Korea secured 200 tonnes of mass urea from Vietnam this week and is in consultation with other nations for up to 10,000 tonnes, enough to make about 30,000 tonnes of the diesel exhaust fluid. The Defence Ministry on Tuesday said the first batch of supply from Australia had been secured.

In 2015 South Korea made it mandatory for diesel cars to use urea solutions to control emissions, which now impacts 40% of registered vehicles.

Diesel vehicles made since 2015 must be fitted with a so-called selective catalytic reduction (SCR) systems that requires injection of urea solutions that help scrub nitrogen oxide (NOx) from diesel exhaust causing air pollution.

Without the urea solution passenger cars do not start and trucks can only travel up to 20 kmh (12 mph), forcing some desperate drivers to try and rig their vehicles or use urea emulators to trick the SCR system, local media reported.

(Reporting by Sangmi Cha, Heekyong Yang; Editing by Michael Perry)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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