China Exacerbates Chaos by Claiming Force Majeure in Commodity Deals

"Everything we were afraid of, like trade wars or global growth, is unmatched," said Jan Stuart, global energy economist at Cornerstone Macro. "This virus is an entirely different risk, particularly in commodities, where China's role is dominant."

RIO DE JANEIRO, BRAZIL - Chinese companies are now failing to comply with purchase contracts as a result of the spread of the coronavirus, thus exacerbating the chaos in global commodity trading.

A Chinese liquefied natural gas (LNG) customer and a copper importer have invoked force majeure clauses to justify their suspending deals, claiming the virus restricts their ability to receive deliveries.

The cancellations are among the first known cases of the clause (which identifies natural disasters or other unavoidable catastrophes as cause for not fulfilling a contract) having been used in commodities contracts due to an epidemic.

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