South Korea's financial sector has raised Yeochun NCC's letter of credit (LC) limit for naphtha imports by $300 million.
According to the Financial Services Commission (FSC) on Tuesday, Yeochun NCC's creditors — including Korea Development Bank (KDB), KB Kookmin Bank, Woori Bank, Hana Bank, and Shinhan Bank — held a voluntary council meeting and approved the measure. The LC limit increase will take effect on the 18th.
Amid growing uncertainty over naphtha supply due to turmoil in the Middle East, Yeochun NCC applied for an LC limit expansion to its main creditor bank, KDB, on the 29th of last month. In response, KDB and other creditors decided to expand the LC limit through a simplified due diligence process, in line with the joint financial sector support framework announced on the 23rd of last month. The simplified due diligence shortened the LC limit expansion period, which typically takes more than six weeks, to two weeks. The Korea Trade Insurance Corporation (K-SURE) will also provide $50 million in import insurance to back the financial sector's support.
"Through this financial support, Yeochun NCC will be able to smoothly import naphtha even in emergency situations such as surging naphtha prices," an FSC official said. "The financial sector will actively provide support under the joint support framework to ensure there is no disruption to naphtha imports for the petrochemical industry."
