ArcelorMittal Breached Charter Agreements, Louis Dreyfus Claims

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Thursday, 04 December 2008

ArcelorMittal, the world's largest steelmaker, was sued by Louis Dreyfus & Cie. SA over claims it breached agreements to ship cargoes at the end of this year. The steelmaker said it wouldn't make shipments agreed on under two separate contracts, commodity trader Louis Dreyfus said in lawsuits filed last month in U.S. federal court in New York. Two units of Louis Dreyfus are seeking a total of $4 million in damages, costs and interest. Steel producers have been slashing output as demand slumps and the global economy weakens. ArcelorMittal said Nov. 5 it was cutting production by more than 30 percent as the worldwide slowdown erodes consumption by builders and carmakers.
ArcelorMittal agreed in a contract dated June 29, 2007, to ship multiple cargoes of 70,000 metric tons through 2009, one of the suits showed. Cia. Siderurgica de Tubarao, a steelmaker in Brazil owned by ArcelorMittal, also agreed in January 2004 to charter vessels until 2009, including 12 shipments of as much as 80,000 tons each this year, Louis Dreyfus said in its filing.
London-based ArcelorMittal spokesman Haroon Hassan directed queries by Bloomberg News to the company's U.S. office, while Bill Steers, a spokesman in Chicago, didn't return calls to his phone outside office hours. Louis Dreyfus spokesman Jean-Michel Aspar didn't immediately return calls to his Geneva office or respond to an e-mail.
China Shipments
ArcelorMittal Brasil SA said on Oct. 31 the shipments for November and December wouldn't go ahead, according to Louis Dreyfus's filing to the court.
The Paris-based commodities trader also sought $9.6 million in damages, costs and interest from North China Shipping Ltd. for allegedly reneging on an agreement to ship 176,000 tons of iron ore from Brazil to China, Louis Dreyfus said in another filing to the court. Charlie Hu, head of ship leasing at North China, wasn't immediately able to comment when contacted by Bloomberg.
A worldwide credit freeze and economic slowdown has cut demand for shipments of raw materials. Rental rates for vessels most commonly used to haul iron ore and coal have plunged 99 percent to $2,316 a day from a record $233,988 on June 5, according to the London-based Baltic Exchange.
As Adapted from Bloomberg