What Does “USC per KG” Mean in an LC Unit Price?

Intro

Letters of credit occasionally state the unit price as USC per KG rather than USD per KG, which can cause confusion. Here’s what it means.

Question

Dear Mr. Old Man,

I hope this email finds you well.

I came across the following scenario today.

Field 45A of the LC describes the goods as Wool, and the unit price is stated as USC per KG. The LC currency is USD, and the commercial invoice also states the amount payable in USD.

What does USC per KG mean?

To calculate the invoice value, the formula used is:

Quantity × Unit Price (USC per KG) ÷ 100

Does USC stand for US cents? Is that why the amount is divided by 100 to arrive at the value in USD?

Could you please explain?

Thank you.

Regards,

Priya

_____

Answer

Dear Priya,

Thank you for your question.

Yes, you are correct.

In this context, USC stands for US cents, where 100 US cents = 1 US dollar (USD).

Therefore, when the unit price is expressed in USC per KG, the invoice amount in USD is calculated as:

Invoice Amount (USD) = Quantity × Unit Price (USC per KG) ÷ 100

For example:

• Goods: Wool
• Quantity: 2,000 kg
• Unit Price: USC 50 per kg

Invoice Amount:

2,000 × 50 ÷ 100 = USD 1,000

Although the unit price is expressed in US cents, the invoice and the amount payable remain in the LC currency, which is USD.

It is also worth noting that quoting commodity prices in US cents per unit (e.g., kg, lb, or pound) is common in international commodity trades such as wool, cotton, coffee, and some metals.

I hope this clarifies the matter.

Best regards,
Mr. Old Man