Chinese buyers may default on a further 1.2 million tonnes of soyabeans worth about $900 million being shipped from the United States and South America, to avoid incurring huge losses in a depressed local market, the country's top soya buyer said. The hard-line approach taken by Chinese buyers raises the possibility that more cargoes could be dumped into the market, after buyers walked away from at least 500,000 tonnes of shipments in recent weeks.
Trading firms mostly clustered in China's Shandong province have refused to make payments for about 20 shipments, Shao Guorui, general manager of Shandong Sunrise Group, said in an interview. Sunrise accounts for about 12 percent of China's soyabean imports and is part of Shandong Chenxi Group Co, a firm run by Shao Zhongyi, China's 357th richest man according to Forbes' 2012 rich list, and Shao Guorui's brother. The family made its money in the petrochemical business.
"Most of the cargoes were delivered by the seller before receiving letters-of-credit and buyers are unwilling to pay now because they will suffer massive losses," said Shao, speaking from a hotel suite he uses when in Rizhao in this eastern province. "If buyers cannot resolve the issue, they may also cancel future shipments." Shao declined to say if his company had also defaulted or had any plans to.
