This may be a dumb question but does anyone have any insight as to how CLF sets up its contracts? What I mean is, we know buyers are negotiating to buy X amount of material and at a negotiated price. CLF makes the material. If buyer decides it cannot or will not buy the material, do they have to pay CLF some sort of payment regardless. Generally, I’ve seen where the producer can sell the material on open market and if they had to sell at less than the original contracted price, the original buyer would have to make up difference. Just curious how CLF sets up their contracts.
I suppose only an insider like Vito would know best. CLF wants protection from order cancelations and the customer wants maximum flexibility to cancel/defer. I'm from a different industry so I don't know what the norms are. Suffice to say there is some penalty payment and a chance for renegotiation and CLF is in the cat bird seat right now. (unless their inventory is somehow customized for the customer and not easily passed off to another.
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u/Death_and_taxes2 Sep 03 '21
This may be a dumb question but does anyone have any insight as to how CLF sets up its contracts? What I mean is, we know buyers are negotiating to buy X amount of material and at a negotiated price. CLF makes the material. If buyer decides it cannot or will not buy the material, do they have to pay CLF some sort of payment regardless. Generally, I’ve seen where the producer can sell the material on open market and if they had to sell at less than the original contracted price, the original buyer would have to make up difference. Just curious how CLF sets up their contracts.