Commodity Chaos Deepens as China Buyers Invoke Force Majeure - Bloomberg

Commodity Chaos Deepens as China Buyers Invoke Force Majeure - Bloomberg:

The turmoil engulfing global commodity markets deepened as Chinese companies started walking away from delivery contracts because of the coronavirus.

In a dramatic and rare step, China National Offshore Oil Corp. declared what’s known as force majeure, meaning it won’t take delivery of some LNG cargoes, because the virus is constraining its ability to import the fuel. It’s among the first known cases of the legal clause being invoked in commodity contracts as a result of the epidemic.

Hours later, it emerged that Chinese copper smelter Guangxi Nanguo had invoked the same get-out, refusing to take delivery of raw materials.

While global markets bounce back from initial fears over the impact of the virus, the fallout is only worsening in the world of raw materials, which is dominated by China’s enormous appetite. Beijing’s efforts to contain the disease by shutting down swathes of the country and restricting travel are disrupting supply chains and hammering demand in the world’s biggest consumer.