Trucks carrying copper and other goods are seen waiting to enter an area of the Shanghai Free Trade Zone, in Shanghai September 24, 2014. REUTERS/Carlos Barria/File PhotoApril 15 - Russian Copper Company and Chinese firms have avoided taxes and skirted the impact of Western sanctions by trading in new copper wire rod disguised as scrap, three sources familiar with the matter told Reuters.
The sales of new metal disguised as scrap, which started in December, are reflected in a discrepancy between Chinese and Russian data. China's customs in Xinjiang, which borders Russia, did not respond to an emailed inquiry and a telephone call. Copper scrap, by contrast, is a mix of wires, tubes and pipes that have already been used. They are chopped into grain-sized pieces or coiled and pressed, like packs of noodles, for transport.Apart from the financial incentive of avoiding taxes, the shredded metal is harder to identify and trace - making it easier to sell to Chinese manufacturers.
However, from December last year, China's copper scrap imports from Russia rose significantly, customs data showed.Russian data showed a mismatch, indicating the country sold only 73 tons of copper scrap to China in the same month. While Russian data showed minimal scrap exports, a sudden increase in wire rod exports occurred in December.