Coronavirus impact: China metal exporters hit by rejection, damage claims

Some overseas buyers of Chinese metal products have stopped accepting shipments amid the coronavirus outbreak, while others are seeking damages over delays, a China trade body said on Tuesday.

Companies from countries including Russia, Turkey, the Middle East and North Africa have told Chinese suppliers they will not accept deliveries, or have sought to suspend purchases, the Metallurgical Council of the China Council for the Promotion of International Trade said on its website.

At the same time, other international customers, including from India, are seeking damages for goods that haven't been delivered on time, the state-backed body added, without naming specific firms or products.

The coronavirus outbreak, which has now killed more than 1,800 people in China, has also put a halt to face-to-face business communications, said the trade group.

"In India, March is its very important financial year (end) when companies will make their purchase plan for the coming year," it said, adding that Chinese firms would lose business.

China is the world's biggest metals consumer but also the top exporter of some industrial metals, such as steel and aluminium. It shipped out about 370 billion yuan ($52.8 billion) of steel products and 97.4 billion yuan of aluminium products in 2019.

However, metal output is set to drop sharply as workers stay at home to meet quarantine requirements. Companies also are struggling to secure raw materials or ship out products amid transport curbs aimed at stopping the spread of the virus.

LOGISTICAL DIFFICULTIES

Steel exporters face a dilemma of whether to ship product via sea or rail, the council said, noting that inland transportation costs have surged and seaports were operating at low efficiency, which is affecting deliveries.

At Dalian port, loading and unloading has slowed with many workers returning from other provinces still in quarantine, said a trader who requested anonymity as he is not authorized to talk to media.

"Some countries have started to close border crossings, making customs clearance very difficult," said the trade group.

Exporters are also having to cope with disruptions due to short-staffing in other sectors, such as finance.

A steel trader in eastern Hangzhou city told Reuters his firm had been unable to fill some export orders due to difficulties obtaining credit.

"It normally takes us 2-3 days to get a letter of credit but now one week might not guarantee it," the trader said.

A metallurgical council official told Reuters the group's annual International Steel Market and Trade Conference, slated for late March in eastern Shandong province, has been postponed due to the epidemic, joining a long list of major events to have been cancelled or delayed.