[texas booster]

In the coming weeks at least a dozen other Chinese copper buyers could use force majeure to try to renegotiate copper import contracts, said traders in the city. Guangzhou is about 1,000km south of Wuhan, the outbreak’s centre.

Copper users, ranging from car companies to home appliance makers, face a sharp drop in sales if the outbreak continues to worsen.

Consultancy Wood Mackenzie said demand for copper-related products could suffer “further disruptions” after more than a dozen provinces imposed restrictions on people’s movements in an attempt to contain the disease.

That has prompted copper traders to embrace the use of force majeure, even if it comes at the expense of their business partners.

“Sellers have to accept our terms because the disease has made business contracts invalid,” said an executive at Shenzhen Yongfulu, a copper trader in southern China with annual revenues of about Rmb40m.

Yongfulu imported 4,000 tonnes of copper last year. The company asked its suppliers in Chile and Somalia to postpone shipments of 400 tonnes of copper for at least two weeks.

A plunge in Chinese purchases would send shockwaves through the global copper market. The nation accounts for half of global consumption of the metal, according to the International Copper Study Group. Copper futures traded in Shanghai have fallen 8 per cent since the beginning of this year.

The coronavirus epidemic, which has killed more than 600 people and infected thousands more, has rattled China’s supply chains. Local smelters have continued to operate, but the decision to shut down roads in cities across China has caused delays in them receiving raw materials.

The practice of force majeure is controversial. Dan Harris, a lawyer who has worked on force majeure cases against Chinese firms, said an overuse of the clause will hurt Chinese copper importers in the long run.

“Legally, these Chinese companies may be in the right,” said Mr Harris. “But [copper sellers] are going to remember that. A year from now they are not going to sell to those Chinese companies.”

[texas booster]

Not good for the economy.

Not importing copper and slowing down on LNG.

Hmmm ...

[grey_whiskers]

I knew I should’ve shorted the sh*t out of the Baltic Dry Index...

[Gen.Blather]

I don’t know the state of America’s strategic materials supply, but this seems like an excellent buying opportunity that will keep the lid on inflation for a decade to come.

[FtrPilot]

Every contract written should include a "force majeure" clause.

Declaring "force majeure" for the coronavirus epidemic seems reasonable. The Chinese copper buyers are seeking delays, not cancellation.

[null and void]

Bring Out Your Dead

Post to me or FReep mail to be on/off the Bring Out Your Dead ping list.

The purpose of the “Bring Out Your Dead” ping list (formerly the “Ebola” ping list) is very early warning of emerging pandemics, as such it has a high false positive rate.

So far the false positive rate is 100%.

At some point we may well have a high mortality pandemic, and likely as not the “Bring Out Your Dead” threads will miss the beginning entirely.

*sigh* Such is life, and death...

If a quarantine saves just one child's life, it's worth it.

[Red Badger]

Somehow, I sense that this coronavirus thing is waaaaaayyyy bigger than what we are lead to believe............

https://en.wikipedia.org/wiki/Force_majeure

[rdcbn]

This is troubling.

What will be even more troubling is when shortages of raw materials once made in United States but where production has been off-shored to China and no US domestic supplier exists and alternate supplies from other Asian countries are also shut off.

Worst of all, many Chinese contractors have subcontracted production labor to even more third world countries like Cambodia or Bangladesh where contract and property rights for foreigners range from pretty sketchy to non existent and stuff just disappears

[ameribbean expat]

CNOOC too on LNG:

https://www.worldoil.com/news/2020/2/6/cnooc-refuses-lng-cargoes-declaring-force-majeure-over-coronavirus

[yefragetuwrabrumuy]

The smart thing to do would be to build up a stockpile, guarded by Chinese, in a third country, after paying for it, so that copper production can continue apace.