A South Korean chemical company has complained that Chinese banks are refusing to open letters of credit (L/Cs) for buyers of its products.

Lotte Chemical, which is reckoned to be South Korea's eighth largest company and is one of Asia's biggest chemical producers, says the difficulties are the result of China's displeasure with the company's decision to host at one of its sites a US missile system aimed at neighbouring North Korea.

L/C problems

Reports in chemical trade journals say that since February when Lotte agreed to host the Terminal High Altitude Area Defence (THAAD) system, Chinese banks have toughened regulations on issuing L/Cs to Chinese importers trading with Lotte Chemical.

It is said that the importers have been forced to seek out banks prepared to issue L/Cs while shipments of Lotte chemicals to China have been disrupted.

"Recently, Chinese banks became quite finicky about issuing L/Cs to our Chinese buyers or their issuances are being delayed," an official at Lotte reportedly said.

Missile hosting

In July 2016, Washington and Seoul agreed to deploy the THAAD missile defence system in South Korea to counter North Korea's growing threats and use of ballistic missile and nuclear tests. Each THAAD unit consists of six truck-mounted launchers, 48 interceptors and a radar.

Seaongju County was chosen as the site to base the THAAD, but this sparked protests from local residents concerned about radiation emitted by the radar.

To alleviate those concerns, THAAD was relocated to Lotte Skyhill Seongju Country Club, farther from the county's main residential areas and on higher ground.

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