The Financial Services Commission said on the 23rd it has set up a joint financial-sector support framework for naphtha imports linked to the Middle East situation.
The move follows a recent surge in naphtha prices and growing supply uncertainty as the situation in the Middle East drags on. Naphtha is a key feedstock for South Korea’s petrochemical industry, and any import disruption could affect production across the sector.
At the center of the plan is expanding L/C limits. Korea Development Bank, the Export-Import Bank of Korea and commercial banks plan to increase L/C issuance limits for companies that have signed naphtha import contracts, helping them secure funding.
When a company applies for L/C support through its main creditor bank, the bank will review the request and, after consultations with the creditor group, move quickly to provide support. Costs will be shared based on each institution’s credit exposure, and the Korea Trade Insurance Corp. plans additional support through import insurance.
To speed up assistance, financial authorities will streamline procedures. The time typically required to expand L/C limits — usually more than six weeks — will be cut to within three weeks through simplified due diligence. If needed, the main creditor bank will issue a letter of intent, or LOI, to help companies finalize import contracts.
The Financial Services Commission and the Financial Supervisory Service also said they will apply liability protection for staff involved in the process when there is no intent or gross negligence, to encourage active support by financial institutions.
At a meeting held the same day, financial-sector officials agreed to maintain close coordination in responding to the Middle East-driven risks and to be ready to execute naphtha import financing support immediately.
* This article has been translated by AI.
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