chensihong@chensihong.org
Non-Operative Letter of Credit
chensihong@chensihong.org
chensihong@cableplus.com.cn
Non-Operative Letter of Credit

陈斯红www.chensihong.org先生：

你好！

对于贵方转发的3份买方发出的Email，分别为：

3.1 可否不采用循环LC，这样对于我们公司的整个业务将产生很大影响，资金运转不过来，而且可操作性不强；我们希望以中国商检CIQ为准；

如果采用95%的SGS，5%的中国CIQ为商检依据。我们希望选择LC 90DAYS的付款方式，可否操作？
谢谢
其他都可以具体详谈，谢谢。

CTY Mr.

------ 如果不采用revolving LC, 我们必须看到信用证样本，然后才可决定。对于付款，我们将使用国际通用惯例，95%付款根卖方SGS标准，5%根据中国CIQ标准。chensihong@chensihong.org
chensihong@chensihong.org

陈斯红www.chensihong.org先生

3.2 Date: March 14, 2005
Letter of Intent

Name of Commodity: Iron Ore Fines, 65.5%Fe content basis
Origin：Brazil/Peru
Loading Port: As per supplier’s
Specification：Iron Ore Fines, not less than 65.5% Rejection below 64.5%
Packing：In bulk
Quantity：500,000DMT per month for one year
Shipment: Within 30 days after the seller receives the operative payment instrument
Loading Rate: pls advise us
Destination Port: China North Main Ports
Inspection: S.G.S. inspection at the loading port
CIQ inspection at the destination port
Payment: 100% irrevocable, transferable and revolving Letter of Credit at Sight
Price: US$_________ per DMT CNF China North Main Ports

Bank Information：
Bank Name:
Address:
Swift Code：
Account Holder:
Account No.:

chensihong@chensihong.org
chensihong@chensihong.org

陈斯红www.chensihong.org先生

------- 我们希望将总量扩展到720万公吨/年，买方为同一个厂家，我们将根据信用证付款方式确定价格。

MODE1. US$69.80(SIXTY EIGHT USD)./DMT CNF FOR IRREVOCABLE, NON-TRANSFERRABLE,OPETATIVE CREDIT ON A YEARLY BASIS FOR THREE YEAR.

TOTAL AMOUNT OF THIS CONTRACT:

USD69.90 X 7,200,000MT/PER YEAR=US$ (** USD) /PER YEAR

MODE2. US$74.80(USD)./DMT CNF FOR IRREVOCABLE, NON-TRANSFERRABLE, REVOLVING OPETATIVE CREDIT ON HALF A YEARLY BASIS FOR ONE YEAR FOR THREE YEAR.

TOTAL AMOUNT OF THIS CONTRACT:

USD74.00 X 7,200,000MT/PER YEAR=US$(USD) / PER YEAR

MODE3. US$82.80(EIGHTY TWO USD)./DMT CNF FOR IRREVOCABLE, NON-TRANSFERRABLE, REVOLVING OPETATIVE CREDIT ON A MONTHLY BASIS FOR THREE YEAR.

TOTAL AMOUNT OF THIS CONTRACT:

USD82.00 X 7,200,000MT=US$(USD) / PER YEAR

chensihong@chensihong.org
chensihong@chensihong.org

陈斯红www.chensihong.org先生

3.3 Date: March 14, 2005
Letter of Intent

Name of Commodity: Iron Ore Fines, 64.5%Fe content basis
Origin：Brazil/Peru
Loading Port: As per supplier’s
Specification：Iron Ore Fines, not less than 64.5% Rejection below 63.5%
Packing：In bulk
Quantity：500,000DMT per month for one year
Shipment: Within 30 days after the seller receives the operative payment instrument
Loading Rate: pls advise us
Destination Port: China North Main Ports
Inspection: S.G.S. inspection at the loading port
CIQ inspection at the destination port
Payment: 100% irrevocable, transferable and revolving Letter of Credit at Sight
Price: US$_________ per DMT CNF China North Main Ports
Bank Information：
Bank Name:
Address:
Swift Code：
Account Holder: .
Account No.:

-------见2.2

如果有任何意见，请尽快告知。

--------------------------------------------------------------------------------

chensihong@chensihong.org

;

chensihong@chensihong.org;

chensihong@cableplus.com.cn;
主题: Non-Operative Letter of Credit

Although the 'non-operative L/C' is a financial instrument readily available in major centers to facilitate settlement of international trades; however, it is not available in China to importers. All L/Cs attract an L/C opening charge of around 0.15%, non-refundable. All L/Cs are 'operative' once opened.

Unless an importer is able to arrange for an non-operative L/C to be opened by an international bank in HongKong, iron ore suppliers must accept an alternative instrument, Notice of L/C Issuance, which is the Pre-Advice issued by the buyer's bank to the seller's bank, confirming that it is funding the L/C, upon receipt of the seller's Performance Bond (PB). Therefore, the Notice of L/C Issuance functions much like a non-operative L/C. Instead of 'activating' the non-operative L/C, the PB 'triggers' the Operative L/C.

Failure to appreciate the limitation of the Chinese banking system in international trade settlements would only result in futille lengthy negotiations leading nowhere. On the other hand, innovative thinking by all parties to a transaction would produce a fruitful outcome without sacrificing reasonable financial protection.

Wishing all many successful business outcomes in China!
chensihong@chensihong.org
chensihong@chensihong.org