The demand for raw materials in China has been slowing, but this takes matters to a new level. Defaulting is an extreme measure in a healthy economy so this does suggest problems ahead for China.
Chinese consumers of thermal coal and iron ore are asking traders to defer cargos and — in some cases — defaulting on their contracts, in the clearest sign yet of the impact of the country’s economic slowdown on the global raw materials markets.
The deferrals and defaults have only emerged in the last few days, traders said, and have contributed to a drop in iron ore and coal prices.
“We have some clients in China asking us this week to defer volumes,” said a senior executive with a global commodities trading house, who warned that consumers were cautious. “China is hand to mouth at the moment.”