BEIJING May 14 China's largest soy buyer
Shandong Sunrise Group said it will not default on soybean
contracts despite facing big losses, in order to protect its
relationship with suppliers, state media reported on Wednesday.
Sunrise, which accounts for 12 percent of China's soy
imports, has previously been linked to defaults by Chinese media
and traders, but the company denied last month it had defaulted
on any contracts.
Buyers in China recently defaulted on at least 500,000
tonnes of soybean shipments and threatened to default on more
shipments which have not yet been priced, capping a rally in
Shandong Sunrise chairman Shao Zhongyi said his firm would
honour its purchase agreements despite facing a loss of about
200 million yuan ($32 million), as weak domestic demand means
crushers are losing money for processing soy into meal and
"Based on current prices, if we take all the cargoes as
previously planned, the losses will be 200 million yuan," Shao
told the Economic Information newspaper, run by the official
Xinhua News Agency.
"Despite the losses, we must honour the contracts," he said,
adding that defaults risk ruining the long-term relationships
Sunrise has built with suppliers and buyers.
Shao Zhongyi is China's 357th richest man according to
Forbes' 2012 rich list. The family made its money in the
His brother, Shao Guorui, told Reuters in an interview last
month that Chinese buyers could default on about 1.2 million
tonnes of soybeans worth about $900 million being shipped from
the United States and South America, to avoid incurring huge
losses in a depressed local market.
Sunrise could not immediately be reached for comment.
Shao said some trading firms that were new to the soy
industry may have defaulted on cargoes because they were unable
to absorb losses. He did not name any firms.
China accounts for 60 percent of the global soy trade and
top seller Marubeni has had to divert some shipments to other
destinations after buyers defaulted on as many as three of its
It is not clear if Marubeni and other sellers have agreed to
revise the contracts to lower prices.
Sunrise also urged Beijing to support measures to set up
China's own pricing centre in Shanghai similar to the Chicago
Board of Trade (CBOT)<0#S:> so that Chinese buyers can have more
say in pricing, the Economic Information newspaper reported.
Tu Changming, a member of the board of Yihai Kerry, the
China operation of Wilmar International Ltd., also
called on Beijing to establish bonded warehouses for soybean and
edible oils at major ports, local media reported.
This would allow it to better respond to domestic market
demand, he said.
($1 = 6.2291 Yuan)
(Reporting by Niu Shuping and Fayen Wong; Editing by Richard