Copper prices surged as Russian Copper Company (RCC) and Chinese firms allegedly evaded taxes and sidestepped Western sanctions by trading disguised copper wire rods.
On Monday’s Asian afternoon session, Copper futures ending in May contracts increased by 0.69% to $4.29 per pound.
Sources disclosed that copper wire rods were processed into shreds within the Xinjiang Uyghur region, blurring the distinction from scrap—this practice leveraged tariff rate disparities, benefiting both exporters and importers.
Meanwhile, in December, Russia’s export duty on copper rods stood at 7.00%, lower than the 10.00% imposed on scrap, while China taxed copper rod imports at 4.00% with no duty on Russian scrap imports.
This manipulation is evident in the inconsistency between Chinese and Russian data. Chinese customs noted a sharp increase in copper scrap imports from Russia, contrasting with Moscow’s figures, which showed minimal scrap exports to Beijing.
Russian customs declined to comment on the discrepancy, citing the cessation of data provision since April 2022.
Despite Western sanctions, the Russian Copper Company (RCC) stated it solely supplies products to domestic firms.
Furthermore, China’s Xinjiang customs, neighboring Russia, remained unresponsive, highlighting Beijing’s significance as a destination for Russian exports amid sanctions after Moscow invaded Ukraine.
Chinese Firms Buy ‘Copper Rods’ from RCC Plant
According to data, in December, Chinese companies reportedly made five purchases labeled as copper rods from RCC’s Urals plant, totaling approximately $65 million in revenue.
However, the UAE-based entity Modern Commodity Trading DMCC, responsible for these transactions, could not be contacted for comment.
According to reports, Russia has never been a significant supplier of copper scrap to China. Meanwhile, recent customs data show a substantial increase in China’s copper scrap imports from Russia, notably through the Alashankou border of Xinjiang.
Russian records indicate only 73 tons of copper scrap were sold to China in December, contrasting sharply with China’s reported imports.
Monthly volumes surged in recent months, reaching 11,599 tons by February 2024, although public customs data on Chinese imports of copper wire rods remain unavailable.
