90 Day LC for Bitumen Import
Last updated: 2026-10-02
A 90-day letter of credit (LC) for bitumen import lets buyers defer payment for 90 days after the bill of lading date, effectively financing a 1,000 MT cargo worth roughly $450,000–$520,000 (at $450–$520/MT) for a full quarter. Sellers typically price this as a 1.5%–3.5% premium over cash or sight LC terms, or roughly $4–$12 per MT, depending on the buyer's credit profile and the supplier's own cost of capital. For many importers, this is still cheaper than a 90-day bank loan at 8–12% annualized interest — but only if the terms are structured correctly.
What Is a 90 Day LC for Bitumen and How Does It Work?
A 90-day LC (also called a usance LC at 90 days or deferred payment LC) is a documentary credit where the issuing bank guarantees payment, but the actual settlement is deferred by 90 days from a defined trigger date.
For bitumen trade, that trigger date is almost always one of the following:
- B/L date — 90 days from bill of lading. Most common for bulk cargo.
- Sight of documents — 90 days from the date the issuing bank accepts clean documents.
- Draft acceptance date — used with time drafts (e.g., "90 days after draft acceptance").
Here is how the typical timeline plays out:
| Day | Event |
|---|---|
| 0 | Vessel departs; B/L issued |
| 3–7 | Documents presented to issuing bank |
| 7–10 | Bank accepts documents; 90-day clock starts (if B/L-dated) |
| 30–45 | Cargo arrives at discharge port; customs clearance |
| 45–75 | Buyer sells/distributes bitumen cargo |
| 90 | Payment due to seller's bank |
| 95–120 | Discounted LC settles if supplier discounted with a bank (buyer unaffected) |
The key distinction importers must understand: the 90-day period is a payment deferral, not a financing you negotiated directly. If the supplier discounts the LC with their own bank at, say, 6% annualized, the supplier eats roughly 1.5% of the cargo value in discount cost — and typically already baked this into the price.
Critical terms to verify before signing:
- The trigger date (B/L vs. documents vs. draft acceptance) — this can shift your actual deferral by 10–15 days.
- Whether the LC is confirmed by a first-class bank (matters enormously for sellers in Russia, Iran, Venezuela-origin cargo).
- Discount charges for whose account — a standard battleground in bitumen contracts.
- Tolerance clause (±5% or ±10% on quantity and value).
Pricing Impact: What Does 90-Day LC Cost Per Metric Ton?
The 90-day LC premium is not a fixed number — it is a function of your bank's credit rating, the supplier's cost of funds, and current trade finance rates. Below is a comparison based on typical market data for a 1,000 MT bitumen cargo (penetration grade 60/70 or viscosity grade VG-30):
| Payment Term | Unit Price ($/MT) | Cargo Value (1,000 MT) | Premium vs. Sight LC |
|---|---|---|---|
| Sight LC / TT in advance | $465 | $465,000 | Baseline |
| 30-day LC | $470 | $470,000 | +1.1% |
| 60-day LC | $477 | $477,000 | +2.6% |
| 90-day LC | $487 | $487,000 | +4.7% |
| 120-day LC | $500 | $500,000 | +7.5% |
| Open account 90 days | $505+ | $505,000+ | +8.6% |
Illustrative pricing. Actual premiums vary ±2% by origin (Middle East, Singapore, South Korea) and by buyer credit standing.
Now compare that to the alternative — financing the cargo yourself with a bank loan or overdraft:
| Financing Method | Rate (Annualized) | 90-Day Cost on $465,000 | Cost per MT |
|---|---|---|---|
| 90-day LC premium (built into price) | ~19% effective | ~$22,000 | ~$22 |
| Bank working capital loan | 9% | ~$11,625 | ~$11.6 |
| Trade finance (invoice discounting) | 12% | ~$15,500 | ~$15.5 |
| Supplier open account credit | 8–15% implied | ~$10,000–$20,000 | ~$10–$20 |
A 4.7% premium on a 90-day term annualizes to roughly 19%, which is why smart importers negotiate the premium hard or use the LC structure as leverage, not as their primary financing.
Practical takeaway: A 90-day LC is usually worth it when (a) your own credit line is tight, (b) you need the supplier's bank to carry the risk, or (c) the supplier offers a premium below 3%. It is a poor deal when the premium exceeds 5% and you have access to cheaper local credit.
How 90-Day LC Terms Differ by Supplier Origin
Not all bitumen suppliers treat 90-day LC the same way. Sanctions exposure, currency of settlement, and bank relationships drive big differences.
| Origin | Typical 90-Day LC Acceptance | Premium Range | Common Settlement Currency | Key Constraint |
|---|---|---|---|---|
| UAE / Saudi Arabia | High | 1.5–3.0% | USD | Buyer bank must be acceptable to supplier |
| Singapore | High | 2.0–3.5% | USD | Fast document turnaround required |
| South Korea | Moderate | 2.5–4.0% | USD | Confirmation often required |
| India | Moderate | 3.0–4.5% | USD | RBI/AD bank compliance checks |
| Russia (export) | Low | 4.0–7.0% | USD/CNY/AED | Sanctions & bank confirmation hurdles |
| Iran (export) | Very low | 5.0–9.0% | Non-USD | Payment channel limitations |
| Venezuela-origin (via third party) | Low | 5.0%+ | Non-USD | Documentation & re-export rules |
What this tells importers:
- If you source from Middle East or Singapore, a 90-day LC is a routine ask and you should target a premium under 3%.
- If you source from sanctioned or restricted origins, expect the premium to double and demand for confirmed LCs to rise sharply.
- Always match the settlement currency to your own FX exposure. A USD LC against a local-currency sale book creates a 90-day FX risk that can wipe out the financing benefit.
Risk Comparison: 90-Day LC vs. Alternative Payment Structures
The financing cost is only half the equation. The other half is risk allocation — who carries which risk during those 90 days.
| Risk | Sight LC | 90-Day LC | Open Account (90d) | TT Advance |
|---|---|---|---|---|
| Buyer non-payment risk | Seller (bank-guaranteed) | Seller (bank-guaranteed) | Seller exposed | Seller safe |
| Buyer credit risk | Bank | Bank | Supplier carries | N/A |
| Goods quality risk | Buyer until inspection | Buyer | Buyer | Buyer |
| FX risk (90 days) | Low | Moderate–High | High | None |
| Document fraud risk | Low | Low–Moderate | Higher | N/A |
| Cost per MT (1,000 MT) | Baseline | +$20–$25 | +$30–$45 | 0 |
| Suits buyer with… | Strong cash position | Tight cash, good bank | Strong supplier trust | Distrust of supplier |
Key insight for importers: A 90-day LC shifts payment timing to your advantage while keeping bank payment guarantees intact for the seller. That is why it remains the default structure for mid-sized bitumen importers moving 500–5,000 MT per month.
Red flags to watch:
- Supplier demands "90 days from B/L but with 100% advance on shipment." That is not a 90-day LC — it is an advance payment with extra steps.
- LC calls for payment on "acceptance" but does not define acceptance deadline. Insist on a 5-banking-day cap.
- Discrepancy fees and amendment charges — at $50–$150 each, they erode a thin margin fast.
- Automatic rollover clauses that extend the 90 days without your written consent.
How to Structure a 90-Day Bitumen LC: Step-by-Step
Getting a 90-day LC approved and issued without hiccups requires the same discipline as the physical trade itself.
1. Set credit line with your issuing bank. For 1,000 MT at $487/MT, you need a $500,000+ LC limit (round up 5% for tolerance and charges).
2. Agree trigger date in the sales contract. Specify "90 days from B/L date" and define the latest acceptable B/L date.
3. Negotiate discount charges. Push for "discount charges for buyer's account if discounted, otherwise split 50/50." Suppliers often concede this.
4. Name the confirming bank. If the seller's bank is not first-class, add confirmation at 0.5–1.0% per quarter — factor this into your delivered cost.
5. Define documents precisely. B/L, commercial invoice, packing list, certificate of origin, analysis certificate (penetration, softening point, viscosity) , and insurance certificate.
6. Insert a discrepancy cure period. 5 banking days is standard; 3 is aggressive but achievable.
7. VerifyUCP 600 compliance. All LCs must follow UCP 600 unless explicitly excluded. Do not accept "UCP latest version" ambiguity.
8. Run the cost calculation. Use the 6Tar cost calculator to model landed cost per MT at different LC tenors before you commit.
Sample cost stack on a 1,000 MT 90-day LC cargo (Singapore origin):
- FOB bitumen: $465,000
- Freight (1,000 MT, Handysize): $35,000–$55,000
- Insurance: $1,400
- 90-day LC premium: $22,000
- LC confirmation (if required): $2,500
- Port/agency/customs: $8,000–$12,000
- Total landed: ~$535,000–$547,000 (~$535–$547/MT)
That final number — $535–$547/MT landed — is what you should be comparing against your local market price, not the FOB headline.
FAQ: 90 Day LC for Bitumen Import
Q1: How much does a 90-day LC add to the price of bitumen per metric ton?
A 90-day LC typically adds $20–$35 per MT to the cash price, or roughly 4–7% of cargo value, depending on supplier origin and buyer credit. Middle East and Singapore suppliers usually price this at the low end (3–5%), while restricted-origin suppliers may charge 5–9%. Always convert the premium into an annualized rate to compare with your own financing costs.
Q2: Is a 90-day LC better than paying cash for bitumen?
It depends on your cost of capital. If you can borrow locally at under 8% annualized, cash purchase is usually cheaper than a 90-day LC priced at a 4–5% quarterly premium (equivalent to ~16–20% annualized). A 90-day LC wins when your bank credit line is tight, when the supplier's bank risk transfer is valuable, or when the LC premium is below 3%.
Q3: Can a 90-day LC be discounted by the supplier's bank?
Yes. Most suppliers with a 90-day LC will discount it with their own bank to receive early payment, and the discount cost is 1.2–2.0% per quarter at current trade finance rates. The commercial question is who bears that cost — insist the contract states "discount charges for buyer's account only if explicitly agreed" , or negotiate a 50/50 split.
Q4: What trigger date should I specify in the bitumen LC?
The most buyer-friendly trigger is "90 days from B/L date," which gives you a full 90 days from shipment regardless of document delays. The least favorable is "90 days from draft acceptance," which can add 10–15 days. Always specify the trigger, the maximum document presentation period (21 days is standard), and the acceptance deadline (5 banking days).
Q5: Are there sanctions issues with a 90-day LC for bitumen?
Yes, origin matters. LCs involving Russia, Iran, or Venezuela-origin cargo face bank confirmation refusals and compliance delays that can add 15–30 days to the transaction. Even non-sanctioned cargo needs a clear certificate of origin and proof that no sanctioned entity is in the payment chain. Check with your bank's trade finance compliance team before opening the LC.
Calculate Your 90-Day LC Bitumen Landed Cost with 6Tar
Before you commit to a 90-day LC, model the full landed cost — FOB, freight, insurance, LC premium, confirmation charges, port costs, and the annualized financing drag. The 6Tar cost calculator lets you input tonnage, origin, payment tenor, and discount rate to get a