Precious metals traders tied to China’s vast supply chain are staring at losses of at least 1 billion yuan, or $144 million, after a key counterparty disappeared and left contracts unfinished.
The center of the mess is Xu Maohua, a metals dealer known across China’s trading circles as The Hat. He vanished after years of running deals that linked private companies, banks, and state-backed companies. The biggest name caught in the fallout is SDIC Commodities, a unit tied to a Jinping-backed conglomerate with nearly 200 billion yuan in annual sales.
<h3 id="xu-maohua-builds-a-web-of-metal-deals-that-breaks-overnight">Xu Maohua builds a web of metal deals that breaks overnight</h3>
Xu owed SDIC money for shipments of copper and other metals. SDIC then owed its own suppliers. When Xu left the country, that payment chain broke in one shot. One trader involved in the deals said unpaid invoices piled up immediately and nobody knew who would take the loss inside China.
The legal trouble arrived quickly. One exchange filing shows a lawsuit against SDIC for more than 200 million yuan over bills that were never settled. SDIC has not issued a public response. Another filing shows Guangdong Prolto Supply Chain Management Co., based in <a href="https://www.cryptopolitan.com/pony-ai-gains-shenzhen-clearance-robotaxis/" rel="noopener noreferrer nofollow">Shenzhen</a>, suing SDIC for 219 million yuan tied to metal concentrate deliveries that went unpaid.
Courts stepped in.
A Tianjin court froze 3,150 tons of refined copper stored in Wuxi, Jiangsu, after a policy bank requested asset protection. The copper remains locked while legal fights continue. Traders say the freeze shows how serious the situation has become across China’s metals market.
SDIC Commodities operates under State Development &amp; Investment Corp., a state group that runs power plants and takes part in the Belt and Road program. Regulators have warned companies like this to stick to core business.
Circular trading has drawn special attention. That practice involves buying and selling the same cargo between companies to book fake revenue. Traders said Xu’s exit snapped one of those chains that had run quietly for years in China.
<h3 id="regulators-tighten-pressure-as-silver-bets-and-past-scandals-resurface">Regulators tighten pressure as silver bets and past scandals resurface</h3>
Xu ran his operation from Foshan in Guangdong. He controlled several companies that bought metals from smelters or traders and resold them to state companies. The deals often included promises to buy the cargo back later.
Six former associates said these trades boosted reported sales while bending rules that limit what state companies can trade inside China.
Cash came in fast. Xu sold invoices from state customers to factoring companies and banks at a discount. That brought in money before metals were delivered. Several traders allegedly <a href="https://www.bloomberg.com/news/articles/2026-02-02/metals-traders-lose-at-least-144-million-as-hat-flees-china?taid=6980021568c9b90001d1c756&amp;utm_campaign=trueanthem&amp;utm_content=business&amp;utm_medium=social&amp;utm_source=twitter" rel="noopener noreferrer nofollow" target="_blank">said</a> some cargo was never his to sell.
Others said many companies in the transactions were owned by Xu himself. One trader said the paperwork looked clean until the cash stopped.
The sector has seen this before. Metals markets in China have suffered scandals ranging from the collapse of a top copper importer to fake aluminum stockpiles that caused more than $1 billion in losses. In that case, a trader received a life sentence last year.
Xu was born in 1972 in Baiyin, in Gansu province. He earned a bachelor’s degree from North China University of Technology in Beijing. He started trading recycled metals in Guangdong, then expanded into refined metals and concentrates such as copper, zinc, and indium. People close to him declined to be named.
The losses have now reached the state-owned assets watchdog, which recently ordered major commodities traders to review operations and cut side activities used to boost revenue.
Officials warned that any pullback by state companies could drain liquidity and hit smaller players across <a href="https://www.cryptopolitan.com/trump-welcomes-china-and-india-investment/" rel="noopener noreferrer nofollow">China</a>.
SASAC first imposed restrictions in 2023 after a debt crisis at a state timber company, but enforcement of those restrictions never actually came since overall growth slowed.
Outside metals, traders also watched silver crash more than $40 an ounce in less than twenty hours after rare highs.
In a separate development meanwhile, President Donald Trump said he welcomed investment by China and India in Venezuela’s oil sector, as one major Chinese buyer of Venezuelan crude turns to Canadian cargoes instead.
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China reports $144M metals losses after counterparty Xu Maohua disappears

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