Introduction

Chinese steel products are globally renowned for reliable quality, competitive pricing and flexible custom-manufacturing options. Nevertheless, steel-trade fraud cases have increased in recent years.

This Guide V1.0 is compiled by CSMC for overseas buyers — especially first-time purchasers without trusted local partners. It outlines common trade pitfalls to help you mitigate financial losses when importing steel from China.

Ⅰ.How to Prevent Steel-Import Scams

1. Confirm the seller’s official Chinese and English business name

· All mainland-China business licenses are issued in Chinese.

· Always verify exactly who your counterparty is. Request copies of their business license and customs filing certificate (containing registered English name).

· These documents establish legal identity, critical if you need to pursue claims in case of disputes.

2. Verify company scale, credit history and export performance

Cross-check public business records to evaluate the supplier:

· Legitimate factories usually employ 10+ staff members.

· Legitimate trading companys normally have at least 3 permanent employees.

Exercise extreme caution if public records show zero employees registered 

·  Avoid suppliers with proven bad credit history.

·  Reported export volumes offer partial insight into real trading capacity, though full export records cannot always be accessed.

3. Key processes should use email

We found that most scammed buyers only confirm transactions through chat apps, which carries a high risk. Sellers should be required to send the core communication content to the email simultaneously, such as quotation, key product information, packing list, invoice, seller's response and explanation to questions, etc

4. Payment bank account — critical risk checkpoint

· For T/T (Telegraphic Transfer) payment terms:The receiving bank account provided by the seller should be registered in the same city shown on their business license.

 Most steel scams happen when buyers send funds to off-shore bank accounts, such as accounts registered in Hong Kong, Singapore or Vietnam.

· Exception: Off shore accounts provided via Alibaba International for official Trade Assurance orders are acceptable under agreed platform rules.

· Using L/C (Letter of Credit) payment greatly lowers fraud risk. Around 90% of high-risk fraudulent sellers will refuse to trade under L/C terms.

5. Product pricing: Beware of unrealistically low offers

CSMC publishes daily benchmark domestic prices for 93 steel grades. Prices are collected from representative Chinese steel markets and reflect domestic ex-factory cost benchmarks for suppliers.

For cross-border transactions, your final contract price should fall within the range: -5% ~ +20% against this benchmark market price. Even for extremely large order volumes, this price band still applies for steel commodities.

· If your agreed price is 5% or more below the benchmark price: fraud risk rises sharply.

· If your agreed price is 15% or more below the benchmark price: the deal is almost certainly a scam.

· Most scams, when buyers question why your price is so low, sellers will give seemingly reasonable explanations such as exemption from value-added tax, spot handling, or even bankruptcy clearance

 Before paying any advance deposit, always clarify in writing:

· Incoterms (FOB, CIF, etc.)

· Whether VAT tax is included in the quotation,If not included, it may be added to the total price when you make the final payment

· Is the name of the customs declaration subject the seller themselves

· Any hidden extra fees

· Quotation validity period

Many scammers raise prices by claiming the quotation expired. International remittances normally take 3-7 working days to clear, which can easily outrun short quote validity.

Best practice: Best practice: Confirm with the seller to lock in the price on the quotation when you have a remittance receipt, rather than the other party receiving the payment (uncontrollable)

6. Formal sales contract

Beyond a simple quotation sheet, sign a formal sales contract with your supplier, and explicitly define dispute-resolution clauses. We strongly recommend executing a bilingual contract including a Chinese-language version. A Chinese-language contract makes it far easier for you to take legal action within China, if required.

7. Third-party oversight for production, loading, quality and quantity inspection

After confirming your order, appoint an independent professional third-party inspection agency. The inspector should monitor manufacturing, packaging and loading processes, conduct product quality testing, and verify the exact quantity of packed cargo.

Ⅱ. Warning Signs  :

You May Have Fallen Victim to a Scam

1. Problems typically surface after you have remitted your advance deposit. Watch for these typical scenarios:

(1) Unilateral price increases

The seller may claim:

· The quotation omitted tax and extra tax must be paid;

· There was a pricing mistake and real price is e.g. USD 200 per ton higher;

· Goods have been detained by customs and extra fees are demanded;

· After receiving payment, they may claim the quote is outdated and update the quote to a very high price or refuse to ship the goods.

You may demand contract performance, yet fraudulent sellers will never ship goods at a loss. You may be forced accept price hikes, or accept only partial cargo matching the amount you already paid — at a total cost far above normal market levels.

(2) Short shipped cargo

When your logistics agent collects goods at port, you find only 20 tons delivered instead of the contracted 100 tons.

(3) Substituted / non-conforming goods

If you ordered stainless steel or copper-alloy products, you could receive ordinary carbon steel, or goods failing the agreed specification, material grade and quantity.

(4) Supplier disappears

The seller stops replying to messages, or claims the previous sales representative has left the company.

2. Typical Outcome

You pursue full refunds but face long delays. Under frustration you may even propose accepting only 60% of your money back, just to recover something.

Ⅲ.Safe Options for Sourcing Steel from China

Many reliable Chinese steel suppliers exist. Small-and-medium buyers can use CSMC trade services under three cooperation models:

1. CSMC acts as your buying agent: CSMC purchases goods from your selected supplier, handles customs clearance & export formalities. Third-party inspection oversight service is included.

2. Direct steel purchase from CSMC. You may appoint any independent third-party inspector for monitoring.

3. Stand-alone service: engage only CSMC’s third-party production supervision and cargo inspection services.

Contact: 

Email：sales@chinasteelmarket.com

Ⅳ.What To Do If You Are Already Caught in a Scam

We have received a large number of cases, please contact us as soon as possible, we will provide assistance

Contact:

Email：cs@chinasteelmarket.com