China smashes steel gangs operating 4.8b yuan export scam

Shanghai

CHINA has detained 245 people after a nationwide raid of gangs suspected of illegally selling more than 2.4 million tonnes of steel scrap to buyers across South-east Asia.

Chinese authorities carried out multiple raids starting Monday morning after an investigation into unusual activity unearthed a network that was shipping scrap without fully paying the 40 per cent export duty, the General Administration of Customs said in a statement on Wednesday. Some 65 gangs were targeted and the value of the goods is estimated at 4.8 billion yuan (S$1 billion).

"Customs authorities noticed a sudden increase in the volume of iron and steel scrap exports over a period of time, which triggered major suspicion regarding low-priced smuggling of exports involving many locations," the statement said.

After investigating, customs police moved to break up the ring, which they believe was coordinated by a Chinese company and a Thai company, the statement said. Neither firm was named.

The action on steel scrap follows on the heels of a case last month that saw 137 people detained - including an employee of Swiss trading giant Glencore Plc - amid allegations of improper imports of waste products, part of broader environmental protections being enforced by China.

China's shipments of steel scrap climbed from almost nothing in 2016 to about 2.2 million tonnes last year, according to customs data. The surge followed a government clampdown on illegal, low-tech plants using scrap to make poorer quality steel. BLOOMBERG