Shady Chinese Buyers Defaulting on Raw Material Cargos

[Sonny]

Chinese Buyers Defaulting on Raw Material Cargos

A senior executive at another large trading house also confirmed there had been defaults and deferrals in both thermal coal and iron ore.

Soft commodities such as soybeans and cotton have also seen Chinese customers default in the past two weeks, a trader at a third global trading house said.
...

“People are worried about China and China is worried about Europe,” he said. “Everyone is worried about growth. You cannot decouple Europe from China.”

Yu Song, analyst at Goldman Sachs, told clients last week that Chinese economic activity was “exceedingly weak.” In response to recent dismal data, the Chinese central bank has cut the portion of deposits that banks must hold as reserves to encourage the flow of credit.

As the world’s main engine of commodities consumption, the Chinese business cycle is key for raw materials markets. The country is particularly important for bulk commodities such as iron ore, used in steelmaking, and thermal coal, used to fire power plants.

It is the world’s largest importer of iron ore, accounting for roughly 60 percent of the seaborne market, while it ranks as the second top importer of coal, behind Japan and with a market share of 20 percent of global trade.

---
China’s economy grew 8.1 percent in the first quarter from the same period of 2011, the weakest rise in nearly three years but still pointing to a so-called soft landing.

Other key economic indicators followed by Chinese policy makers, including electricity consumption, rail cargo volumes and disbursement of bank loans, point to a sharper slowdown, suggesting the risk of a hard landing.

Chinese Buyers Defaulting on Raw Material Cargos

~

[Ross]

Well if that story does not drive the Australian Dollar down a
few pegs nothing will .

[Sonny]

same story but w/spicy commentary

Chinese Buyers Defaulting On Commodity Shipments As Prices Plunge


Submitted by Tyler Durden on 05/21/2012 10:16

http://www.zerohedge.com/news/chines...-prices-plunge

[sandyd]

This sounds really really bad.

[Sysiphus]

I think so. But, not necessarily for the US.

[Ross]

And the Aussie $ takes a bath .

[dyrt]

If Chinese buyers are defaulting then sellers will cut off credit and demand money up front. The Chinese government should start covering the defaults and punishing the scoundrels.