The Russians did not deliver the copper to the port of destination: a trader from China lost $20 million

The ship with a cargo of copper from Russia did not arrive at the port of destination. Because of this, the Chinese trader lost $20 million.

“Wuchan Zhongda Group Co.”, whose sales last year totaled $80 billion, bought 2,000 tons of refined copper from a Russian steel plant, Bloomberg reports.

The cargo was supposed to be delivered last month. According to the publication’s sources, the ship never reached the port.

Instead, the metal was declared as much cheaper granite and probably sent to Turkey. This is evidenced by the records of the shipping company that handled the cargo, said the informants, who wished to remain anonymous.

Employees of the Chinese company even visited Russia to investigate the incident, but could not even determine where the smelter that was supposed to produce the copper for delivery was located.

“Wuchan Zhongda”, based in the eastern province of Zhejiang, declined to comment on the situation.

This incident, while unlikely to have global consequences, is a blow to the international metals trade and its reputation. The sector has repeatedly found itself embroiled in fraud, including stories of forged warehouse receipts and containers filled with colored stones. Last year, trading giant Trafigura Group was hit with a missing metals scheme that cost the company more than half a billion dollars.

Russia is one of the world’s largest suppliers of copper, while China is the largest consumer. Western sanctions imposed on Russian goods after the invasion of Ukraine are expanding trade between the two countries, and Chinese buyers are taking advantage of discounts and other favorable payment terms to support trade.

The risk is that favorable conditions at times of high metal prices may tempt Chinese traders into deals with unproven suppliers. Now Chinese firms, concerned by the latest incident, have begun conducting internal audits of their own contracts with counterparties.

Informants of the publication say that at the end of last year, “Wuchan Zhongda” purchased the metal from the Russian company Regional Metallurgical Co. The supply was to be sold to a local trader, a common practice in China where smaller traders take advantage of bank credit available to larger competitors.

Copper on the London Metal Exchange was then worth $9,821/ton, so at today’s prices, the lost lot could be worth nearly $20 million.

The cargo left St. Petersburg earlier this year and was due to arrive at the Chinese port of Ningbo in late May after being ferried from the Red Sea to the Cape of Good Hope, the sources said.

Last year, China’s total imports of refined copper averaged more than 300,000 tons per month for use in various industries.

Earlier, USM reported that the Russians were transporting grain from the Kherson region to Karelia in Chinese containers.