90 Day LC for Bitumen Import
Last updated: 2026-10-04
A 90-day letter of credit (LC) for bitumen import lets a buyer defer payment for 90 calendar days after the bill of lading date, typically covering a 500–3,000 MT shipment at $340–$480 per MT FOB or $380–$520 per MT CFR. For a 1,000 MT cargo valued at $425,000, a 90-day LC effectively frees up roughly $425,000 in working capital for a full quarter. LC-90 terms usually add a 0.5%–1.5% price premium versus sight LC, or a 2%–4% annualized financing cost built into the unit price.
How a 90-Day LC Works in Bitumen Trade: Structure, Timelines, and Cost
A bitumen LC 90 days is a documentary credit where the issuing bank guarantees payment to the exporter 90 days after the shipment date (or after the B/L date, depending on clause wording). The buyer receives title to the cargo, sells or processes it, and settles with the bank later — a built-in trade finance facility.
| Day | Event | Who Acts |
|---|---|---|
| 0 | Sales contract signed, LC terms agreed (79/80% of contract value) | Buyer + Seller |
| 0–7 | Buyer's bank issues LC via SWIFT MT700 | Issuing bank |
| 7–10 | Advising bank confirms LC to seller | Advising bank / Seller |
| 10–25 | Seller arranges cargo at load port, prepares docs | Seller |
| 25–30 | Vessel loads; B/L dated; documents presented | Seller / Carrier |
| 30–35 | Shipping docs reach buyer's bank; accepted | Issuing bank |
| 35–120 | Payment due 90 days from B/L date | Buyer via issuing bank |
| 120 | Bank debits buyer's account, credits seller | Both banks |
Key point: the 90 days start from the B/L date, not from LC issuance. In practice, a buyer gets roughly 95–105 days of total float when you count document processing time.
| LC Type | Payment Term | Typical Price Premium | Cash Freed (1,000 MT @ $425/MT) | Bank Fee (estimate) |
|---|---|---|---|---|
| Sight LC | At presentation | 0% (baseline) | $0 | 0.10%–0.25% per quarter |
| 90-Day LC | B/L + 90 days | 0.5%–1.5% | ~$425,000 | 0.15%–0.35% per quarter |
| 120-Day LC | B/L + 120 days | 1.0%–2.0% | ~$425,000 (longer) | 0.18%–0.40% per quarter |
| 150-Day LC | B/L + 150 days | 1.5%–3.0% | ~$425,000 (longest) | 0.20%–0.50% per quarter |
| Usance LC (60d) | B/L + 60 days | 0.3%–1.0% | ~$425,000 (shorter) | 0.12%–0.28% per quarter |
Pricing Impact: What 90-Day LC Terms Actually Cost Per MT
The financing cost of deferred payment is rarely stated as an interest rate — it's baked into the unit price. For bitumen specifically, here's what that looks like at three price points.
| Base Price (CFR) | 0.5% Premium | 1.0% Premium | 1.5% Premium | Cost for 1,000 MT (at 1.0%) |
|---|---|---|---|---|
| $380/MT | +$1.90/MT | +$3.80/MT | +$5.70/MT | +$3,800 |
| $425/MT | +$2.13/MT | +$4.25/MT | +$6.38/MT | +$4,250 |
| $480/MT | +$2.40/MT | +$4.80/MT | +$7.20/MT | +$4,800 |
Practical rule: if your cost of capital is above 6–8% annualized, 90-day LC terms are almost always cheaper than paying cash upfront. If your capital is cheap or the seller is asking a 3%+ premium, negotiate.
- Payment is bank-guaranteed — no counterparty risk once LC is confirmed
- Discounting option — the seller can sell the receivable to a bank at 3–6% discount to get cash on day 10 instead of day 120
- Competitive tool — offering LC-90 wins tenders where cash terms tie on price
- Volume leverage — Iranian, Iraqi, and UAE suppliers commonly extend 90 days to repeat buyers moving 5,000+ MT/year
Comparison: 90-Day LC vs. Other Payment Methods for Bitumen
| Payment Method | Days of Credit | Risk to Seller | Risk to Buyer | Cost |
|---|---|---|---|---|
| 90-Day LC (confirmed) | ~95–105 | Very low | Low | 0.5%–1.5% premium |
| Sight LC | 0–5 | Very low | Low | Baseline |
| Documents Against Payment (D/P) | 3–7 | Medium | Medium | Low |
| Open Account (T/T 30 days) | 30 | High | Very low | 0%–0.5% |
| Open Account (T/T 60 days) | 60 | High | Very low | 0.5%–1.0% |
| Advance T/T | 0 (negative) | None | High | -1% to -2% discount |
Takeaway: the 90-day LC sits in the sweet spot — better risk protection than open account, far more working capital than sight LC, at a modest premium.
What Buyers Actually Gain: Working Capital Math
Here's the math a trade finance desk would run for a 2,000 MT/month bitumen buyer switching from sight LC to 90-day LC.
| Metric | Sight LC | 90-Day LC | Difference |
|---|---|---|---|
| Monthly shipment | 2,000 MT | 2,000 MT | — |
| Price per MT | $425 | $429.25 (1% premium) | +$4.25 |
| Monthly value | $850,000 | $858,500 | +$8,500 |
| Days of float | 5 | 95 | +90 days |
| Cash held at any time | ~$42,500 | ~$1,715,000 | +$1,672,500 |
| Annual financing cost | $0 | ~$102,000 (1% of spend) | +$102,000 |
| Effective cost of capital | — | ~6.1% annualized | — |
Interpretation: a 90-day LC on 24,000 MT/year at 1% premium costs about $102,000 annually but keeps roughly $1.7 million of cash in the business at any given time. If you can deploy that capital at anything above ~6%, the deal is profitable.
Structuring a 90-Day LC: Clauses That Matter for Bitumen
Not all "90-day" clauses are equal. Watch these details:
- Payment due date basis: "90 days from B/L date" (buyer-friendly) vs. "90 days from LC issuance" (seller-friendly, can shorten effective credit)
- Usance clause wording: confirm whether it's at 90 days sight (90 days after document presentation) or at 90 days date (90 days after B/L)
- Confirmation: add a confirming bank if you're dealing with Iranian or Iraqi suppliers — costs 0.5%–1.0% per quarter, but eliminates country risk
- Partial shipments: ensure the LC allows them if cargo moves in 500 MT parcels
- Incoterms: CFR and CIF are standard; FOB shifts freight control to the buyer
- Documents required: B/L, commercial invoice, packing list, certificate of origin, and often SGS/Intertek quality certificate (penetration, softening point, viscosity at 60°C)
- Bank charges clause: clarify who pays for discrepancies — usually $75–$150 per discrepancy on the buyer's side
| Document | Purpose | Common Issue |
|---|---|---|
| Bill of Lading (3/3 originals) | Title + shipment proof | Must match LC exactly |
| Commercial Invoice | Value + description | Description must mirror LC wording |
| Packing List | Quantity per drum/bag | Weight discrepancies cause rejection |
| Certificate of Origin | Tariff preference | Iranian origin triggers sanctions clauses |
| Quality Certificate (SGS) | Specs verification | Penetration 60/70, 80/100 grades |
| Insurance Certificate | 110% of CIF value | Required only for CIF/CIP |
FAQ: 90-Day LC for Bitumen Import
Q1: What does "bitumen LC 90 days" mean exactly?
A 90-day LC means the buyer's bank pays the exporter 90 days after the B/L date, not at shipment. The buyer receives the cargo immediately but settles the bank draft roughly 95–105 days after loading. This effectively gives the buyer a three-month interest-free period, minus the LC premium embedded in the unit price.
Q2: How much does a 90-day LC cost for a 1,000 MT bitumen shipment?
Expect a price premium of 0.5%–1.5% built into the per-MT price, plus bank fees of 0.15%–0.35% per quarter. On a 1,000 MT cargo at $425/MT, that's roughly $2,100–$6,400 in premium plus $600–$1,500 in bank charges. Total cost is typically $3,000–$8,000 for the deferral.
Q3: Is a 90-day LC better than open account terms?
For the buyer, open account (T/T 30–60 days) is cheaper and simpler — but most bitumen suppliers won't extend it beyond 30 days without a bank guarantee. A 90-day LC gives you three times the credit period with bank-backed security, at a cost of roughly 0.5%–1.5%. For shipments above 1,000 MT, the LC is the practical choice.
Q4: Can I get 90-day LC terms from Iranian or Iraqi bitumen suppliers?
Yes — Iranian and Iraqi suppliers commonly offer 90-day usance LCs, but the LC usually needs confirmation from a European or UAE bank to be acceptable. Confirmation adds 0.5%–1.0% per quarter and takes 5–10 business days to arrange. Sanctions screening adds another 2–4 days to the process.
Q5: What happens if I reject the cargo at destination under a 90-day LC?
Under a standard usance LC, payment is unconditional once documents comply — rejection of goods doesn't stop the bank from paying. To protect yourself, insist on a quality certificate (SGS/Intertek) as a required document and negotiate a price adjustment clause for off-spec cargo before signing. Without those clauses, you carry full quality risk.
Closing CTA: Model Your 90-Day LC Deal with 6Tar
Before you sign a 90-day LC contract, run the numbers. Use the 6Tar cost calculator to model landed cost per MT, financing premium, working capital freed, and break-even cost of capital across 500–5,000 MT cargoes at 60/70, 80/100, and VG30 grades. Enter your FOB price, freight rate, LC premium, and bank fees — and get an instant per-MT landed cost with the 90-day deferral factored in.
Next step: plug your actual quote into the 6Tar calculator and compare LC-90 against sight LC and open account side by side. A 15-minute check can save you $3,000–$8,000 per shipment.