On the afternoon of yesterday, hundreds of steel business owners gathered at the Creative Hotel on the Hankou Workers' and Peasants' Corps, where they publicly denounced three steel trading companies for "contract fraud." These businesses claimed that over 260 million yuan worth of steel had either not been delivered or could not be refunded. The incident has sent shockwaves through the local steel market, with many merchants reporting significant financial losses.
Among those affected are long-time steel traders operating in the Dan Pond 661 warehouse steel market, some of whom have been in the industry for decades. One trader reported being defrauded of over 22 million yuan, while others said they had lost millions more. Ms. Lu, a business owner who had partnered with Wuhan Xinan Tongyuan Trading Co., Ltd. for three years, explained that the company offered steel at prices 200–300 yuan per ton lower than the market rate. However, starting in March this year, the company began missing delivery deadlines.
By July, the company had accumulated an outstanding order of 5,180 tons of steel, valued at 17.8 million yuan. When Ms. Lu’s company requested a refund, it was denied. Despite failing to deliver, Xinan Tongyuan continued to accept new orders, raising red flags among other traders. Soon after, several major steel users noticed a sudden spike in the company's transaction volume, with no real goods or cash exchanged.
Tie Long, another steel trader, confirmed that the low steel prices had attracted many buyers looking for a deal. He himself had been scammed out of over 3.7 million yuan. As the scandal unfolded, two additional steel trading companies—Dekangsheng and Zhensheng—were also implicated, with reports pointing to a common trader behind the scheme.
As of yesterday, more than 160 dealers had come forward, claiming that 260 million yuan in funds were stuck and that they were unable to receive the promised steel. On August 6, representatives from several major steel users met with the legal heads of the three companies, only to be told that they had no money. Many traders expressed concern, stating that the scale of this fraud has created a major crisis in the Hankou steel market.
After the meeting broke down, over 50 angry traders escorted the company representatives to the public security bureau. According to reports, the Jiangan District Public Security Sub-bureau confirmed that three individuals have been detained and formally charged with contract fraud. While the exact amount of the scam is still under investigation, police are collecting evidence and intensifying their probe into the case. With cases reported nationwide, the full scope of the fraud is expected to emerge in the coming days.
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