A fleeing dealer snapped a copper-financing chain, costing traders over ¥1 billion

Xu Maohua, a Foshan metals dealer nicknamed 'The Hat', ran a web of copper transactions on top of a repurchase commitment. He bought metal from smelters and other traders and resold it to state-owned enterprises including SDIC Commodities, promising to buy the cargoes back at a later date — a structure that let him unlock cash almost immediately by selling the SOE invoices to factoring firms and banks at a discount, sometimes before the metal was even delivered.

When Xu fled the country in early 2026 the chain snapped. Traders and financiers estimated total losses of at least ¥1 billion (about $144 million), with several participants believing the real figure was far higher. SDIC Commodities, a unit of the state-backed State Development & Investment conglomerate, was left owing its own suppliers while waiting on money Xu owed it, and a Tianjin court seized 3,150 tonnes of refined copper.

The failure was a financing structure, not a market event. Shenzhen trader Guangdong Prolto Supply Chain Management sued SDIC for ¥219 million over unpaid metal-concentrate shipments, and a December filing showed the damage spreading through the system. Regulators had long described this 'circular trading' — buying and selling the same asset among related parties to manufacture revenue — as a distortion, and here its collapse converted phantom revenue into real losses.