GUANGDONG, a major destination for international scrap copper, is tightening customs checks on imports of scrap metal.

Delays in clearing customs are reducing the amount of scrap copper available, cutting importers' cash flow and spurring them to trim new orders.

Traders said they believed the customs was cracking down on tax evasion by importers who might have misreported metal content in imported scrap, resulting in smaller payments of a 17 percent value-added tax.

Scrap metal, including copper and aluminum, is not subject to import taxes in China.

"There is a huge cargo congestion in Guangdong ports," a scrap copper trader said Wednesday (May 3). "A lot of imports of scrap copper are lining up for the customs checks."

The trader said some customers' imports that had arrived in early May were still waiting.

"New orders are falling given clients placed a lot of orders in March and April and now the arrived cargoes are stuck in ports," the trader said.

A trading source at a scrap copper importer for top smelter Jiangxi Copper said tightened customs checks had reduced supply, though China's imports of scrap copper hit a six-month high in April. "The supply is not as much as we had expected," he said.

More than a quarter of Jiangxi Copper's refined copper production uses scrap as feed. The company plans to produce 800,000 tons of copper this year.

Tight supply is supporting prices of scrap copper.

Grade No. 1 scrap copper traded at around 37,900 yuan per ton in Guangdong on Wednesday, up 11 percent from mid-May, which is bigger than the 9 percent rise for prices of spot refined copper.