It became known that Chinese “copper” traders had turned to suppliers with a request to cancel or postpone the supply of metal. The reason for this is the decline in demand associated with the ongoing epidemic of coronavirus.
Copper buyers from China are forced to take advantage of a special force majeure clause in supply contracts to postpone deadlines. By the way, the level of cooper demand is a kind of indicator of the state of the economy. If we take into account the catastrophic drop in demand, we can confidently say that coronavirus has seriously affected the state of the Chinese economy.
In order to stop the epidemic, official Beijing was forced to extend the New Year holidays, limit traffic and impose other prohibitive measures. Unfortunately, all these measures could not but affect the industrial activity. Most likely, the growth rate of the Chinese economy will slow down significantly.
The heart of China’s commodity trade is located in the port of Guangzhou. It became known that about a dozen large traders working there were going to cancel contracts for the import of copper, citing force majeure. Guangzhou is located a thousand kilometers from the epidemic center.
It became known that LNG buyers from China were going to use the clause on force majeure to cancel supply contracts.
The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group