Russia and China try to dodge trade sanctions by disguising copper as "scrap metal"

Chinese and Russian traders were caught trying to disguise copper as scrap metal to avoid trade sanctions. The transaction was between Russian copper producer RCC and Chinese companies, who were both trying to evade Western pressure.

Reuters consulted with three sources on the case. They reported that a middleman shredded copper wire rods to resemble a pile of scrap metal, allowing both exporters and importers to benefit from tariff differentials that apply to scrap and new metal.

"Shredding newly-made copper wire rod is an effective way to disguise new material that looks very different to scrap. The new, high-purity copper long, thin rods, mainly used for making power cables, are typically coiled for ease of transport. 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," explained Reuters.

Although formally there are no Western sanctions for China to buy metal from Russian companies, "manufacturers are worried about losing export business to customers - including those in the U.S. and UK - if they are known to be doing business with Russian firms."

In turn, the U.S. sanctions on Russia aim to reduce Russia's export revenue, which could potentially lead to problems processing payments in dollars, the widely accepted currency for international trade.

Reuters reported, "Sources said some Chinese companies have set up new teams to deal with Russia-related business."