09 October 2008 04:45 [Source: ICIS news]
SINGAPORE (ICIS news)--Heightened levels of credit scrutiny in the wake of the global financial crisis are making an already difficult business environment even tougher, said some baseoils buyers and sellers on Thursday.
Letters of credit (LC) from the banks for transactions where sellers refuse to provide similar credit terms are now extremely difficult to obtain, said a baseoils trader in ?xml:namespace>
“LC limits are frozen and there is no credit available for the love of money”, said another baseoils buyer.
The tighter credit environment is sometimes responsible for precipitating price falls of commodities in an already weak demand scenario as traders need to generate cash flows from sales, said regional market players.
Opening LCs for overseas transactions are more difficult in some Asian countries as banks are asking for higher amounts in performance guarantees, said a southeast Asia based trader.
Increased business and financial risks are making it more difficult to transact internationally, said several regional players.
Asian base oils prices have been on a downtrend on the back of falling crude oil values as well as weakening demand from the finished lube sector.
Prices for SN-150 were pegged at $1,280-1,320/tonne (€934.40-963.60/tonne) cost and freight (CFR)
($1 = €0.73)
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