Russia and China trade new copper disguised as scrap metal to circumvent sanctions
The Russian Copper Company (RCC) and Chinese firms have been avoiding taxes and circumventing Western sanctions by trading new copper coils disguised as scrap metal.
Source: Reuters with reference to three sources familiar with the matter
Details: The copper wire rod was shredded in the distant Xinjiang Uyghur region of China by an intermediary to make it difficult to distinguish from scrap. The sources said that this allowed both exporters and importers to profit from the difference in tariffs applied to scrap and new metal.
Russia's export duty on copper wire rod was 7% in December, which is lower than the 10% duty on scrap. Imports of copper wire rod to China are taxed at 4%, while there is no duty on imports of Russian scrap.
Sales of new metal disguised as scrap that started in December are reflected in the discrepancy between Chinese and Russian data.
Chinese customs stated that China had purchased significantly more copper scrap from Russia since December, while Russian data obtained by Reuters from a commercial data provider suggests that the amount of scrap exported to the country's largest trading partner was negligible.
When asked about its copper wire rod trade with Chinese firms, RMC, which is subject to Western sanctions, said it only supplies products to Russian companies. The company declined to comment further.
China has become a major destination for Russian companies seeking to export their goods after the United States imposed sanctions on Russia for its invasion of Ukraine.
Background:
- Copper prices surged to their highest level in 14 months as investors piled into the industrial metal amid rising supply risks and hopes of a global recovery in demand.
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