The financial sector is stepping in to support Yeocheon NCC amid increased supply challenges for naphta due to the prolonged conflict in the Middle East.
On May 7, the Financial Services Commission announced that it would hold a meeting of the "Self-Regulatory Council of Bond Financial Institutions" to discuss a financial support plan that includes raising the naphta import letter of credit (L/C) limit to $300 million.
A letter of credit is a payment method where banks guarantee payment to sellers on behalf of importers.
This support plan is set to be approved by the Self-Regulatory Council on May 15 and implemented on May 18.
Previously, Yeocheon NCC had requested an expansion of the L/C limit from its main creditor, Industrial Bank of Korea. In response, the bank expedited the usual six-week process for increasing the L/C limit to about two weeks, in line with a joint support system for naphta imports amid the Middle East situation.
The Korea Trade Insurance Corporation also plans to provide $50 million in import insurance to bolster financial support.
The Financial Services Commission stated, "This financial support will enable Yeocheon NCC to import naphta smoothly even in emergencies like price surges," adding that the financial sector will continue to provide prompt support to ensure no disruptions in naphta imports for the petrochemical industry.
Meanwhile, Yeocheon NCC's operating rate had dropped to 55% due to supply disruptions from the blockade of the Strait of Hormuz, but it has recently adjusted the rate to 65% considering government support policies.
* This article has been translated by AI.
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