Coronavirus impacts LNG and copper cargoes to China
Bloomberg has reported that a Chinese buyer of liquefied natural gas and a copper importer have reneged on deals as the coronavirus constrains their ability to take deliveries.
In a dramatic and rare step, China National Offshore Oil Corp. (CNOOC) 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.
While global markets have bounced back from initial fears over the impact of the virus, CNOOC’s move shows the fallout is only deepening 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.
The impact is reverberating around the world. Copper buyers are requesting Chilean miners postpone shipments because of port shutdowns, while China’s biggest oil refiner, Sinopec Group, is likely to ask Saudi Arabia to reduce supplies of crude oil next month. Soybeans from Brazil and the US are being held up on arrival in eastern China and Indonesian palm oil shipments are also being delayed.
Even before Chinese buyers walked away from supply contracts, spot prices had already fallen to a record low, affecting the profitability of energy giants like Royal Dutch Shell Plc and Exxon Mobil Corp.
China said last week that it would offer support to companies seeking to declare force majeure on international contracts. The clause allows a company to opt out of obligations without legal recourse because of reasons beyond its control.
China’s largest oil and gas firm, PetroChina Co., was also forced to delay discharge timings for multiple cargoes because it can’t get enough workers to its Rudong, Dalian and Caofeidian LNG terminals to run them at full capacity. The company hasn’t at this time invoked force majeure because of the delays.
Alpha Sapphire produces first synthetic sapphire
Alpha HPA has achieved the completion of its first run of synthetic sapphire growth in what is...
SPEE3D launches mobile additive manufacturing solution
EMU enables industries with large industrial equipment, including defence, mining and marine, to...
Digital twins gaining acceptance in oil and gas: report
Digital twins are rapidly becoming a mainstay in oil and gas operations, according to a recent...
