China’s state-owned enterprise “Wuchan Zhongda” has purchased approximately $20 million worth of Russian refined copper that has gone missing, once again sparking concerns about fraudulent transactions in the metal market.
According to Bloomberg, Wuchan Zhongda Group Co., Ltd. purchased 2,000 tons of refined copper from a Russian smelter named “Regional Metallurgical Co.” The shipment left St. Petersburg, Russia earlier this year, took a detour around the Cape of Good Hope to avoid the conflict in the Red Sea, and was supposed to arrive at Ningbo Port in China by the end of May. However, the cargo has not reached its destination.
Sources revealed that based on the records of the shipping company handling this shipment, the metals were categorized as cheaper granite and likely ended up being delivered to Turkey.
Employees of Wuchan Zhongda have traveled to Russia to investigate the situation but have not been able to determine the exact location of the Russian smelter.
Wuchan Zhongda has not responded to Bloomberg’s request for comments.
Russia is one of the world’s largest copper-producing countries, while China is the leading consumer of copper. Following Russia’s invasion of Ukraine and the sanctions imposed by Western democratic countries, trade between mainland China and Russia has surged. To facilitate trade, many Russian companies have been offering discounted prices and other favorable payment terms to Chinese buyers.
However, the risk lies in the fact that amidst the high international metal prices, these favorable conditions may induce Chinese traders to hastily make deals with Russian suppliers before establishing a stable relationship.
The latest spot trading price for copper on the London Metal Exchange is $9,821 per ton. Based on this price, the value of this shipment is close to $20 million. Wuchan Zhongda Group plans to resell this cargo to a trading company in mainland China.
Sources disclosed that Chinese enterprises affected by this incident have started internal reviews of the relevant contracts they have signed.
Last year, China imported over 300,000 tons of refined copper per month on average for use in various industries such as construction, power transmission, and clean energy.
Although this case of missing Russian refined copper is unlikely to have a significant global impact, it marks the latest blow to international metal trading. The industry has repeatedly fallen victim to trading scams involving commodities, including forged warehouse receipts and the substitution of purchased valuable metals.
In 2023, Swiss trading giant Trafigura Group accused multiple companies of trade fraud where containers that were supposed to contain nickel were filled with low-cost carbon steel or other worthless metals. As a result, the company may have incurred losses of nearly $600 million.