November 4, 2008
South Korea's commodity importers face credit crunch

South Korean commodities importers are finding it tougher to get bank financing, but that hasn't affected import volumes yet, two Seoul-based experts said Tuesday.


"The high price of the dollar relative to the Korean won and banks' reluctance to increase exposure to commodity imports in a volatile market are creating problems for importers," said Nicholas Chung, manager of the commodities team at the Korea Development Bank.


However, imports of commodities including grains haven't yet been affected, he said.


"No visible impact on commodity imports has been seen yet, but if the crisis extends beyond 2008 it could have repercussions," he said.


A grains trader in Seoul confirmed that grains importers are finding it tougher to extend their credit lines with banks.


"Grains importers need more credit right now. But banks have become conservative about lending. So, if you have a $10 million credit line and need $5 million more, that could be difficult to get," said the trader, who didn't want to be named.


But the trader also confirmed that grains imports have so far not been affected by the credit crunch.


He said help for importers has come from the USDA, which has allocated US$600 million worth of credit to South Korean importers of US agricultural products starting Oct. 1.


"The US programme offers credit at a cheaper rate than Libor and importers are taking advantage of this facility," said the trader.


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