China disguising imported Russian copper as scrap to avoid sanctions

Russian Copper Company (RCC) and Chinese firms are suspected of evading taxes and bypassing Western sanctions by disguising new copper wire rod as scrap, Reuters cited three sources familiar with the situation on Monday.

The copper wire rod was shredded in Xinjiang Uyghur region by an intermediary to make it difficult to differentiate from scrap, allowing both exporters and importers to benefit from variations in tariffs applied to scrap and new metal.

In December, Russia’s export duty on copper rod was seven per cent, lower than the 10 per cent duty on scrap. Meanwhile, imports of copper rod into China are taxed at four per cent, with no duty on Russian scrap imports.

Chinese customs data indicates a significant increase in copper scrap imports from Russia since December, while Russian data obtained by Reuters from a commercial data provider shows minimal scrap exports to China, its largest trading partner.