As a result of the deadly viral disease that has kept China and the rest of the world on its toes, the global trade has fallen even deeper into chaos through China’s reluctance to engage in commodity deals.
Chinese businessmen and companies have refused to buy products from other countries, with Coronavirus putting the whole world in an unwanted position.
According to Bloomberg, a Chinese buyer of liquefied natural gas and a copper importer declared what’s known as force majeure — meaning they are reneging on deals as the virus constrains their ability to take deliveries. The cancellations are among the first known cases of the legal clause being invoked in commodity contracts due to the epidemic.
“Everything that we were afraid of, from trade wars or global growth, doesn’t compare,” said Jan Stuart, global energy economist at Cornerstone Macro. “This virus is an entirely different risk, especially in commodities where China’s role dominates.”
China National Offshore Oil Corp., the nation’s biggest LNG buyer, invoked force majeure and told some suppliers it won’t take delivery of cargoes because of constraints caused by the coronavirus. French oil and gas giant Total SA rejected the declaration.
While Total acknowledged receipt of the Force Majeure, it said it won’t follow the plan.
“Of course we have to be careful, if there is a real quarantine in all unloading ports in China, we have a real case for force majeure,” he said. “But for the time being, this is not the case. For me it is ordinary negotiation.”
China is the biggest importer of raw materials in the world and after a breakout of one of the greatest pandemics seen in the world in recent times, it has stopped its engagement with other nations.
Many nations have had no choice but to accept the Force Majeure with all hands on deck to end the scourge of the Wuhan Coronavirus.