Apr. 25, 2026 - On the evening of April 24, Puyang Refractories Group Co.,Ltd (PRCO) announced that the company recently received an Indictment issued by the People’s Procuratorate of Yingkou City, Liaoning Province.
The company stated in its announcement that the Yingkou People’s Procuratorate has ascertained in accordance with the law that, prior to October 2023, PRCO purchased natural flake graphite—the raw material for producing magnesia-carbon bricks—and shipped it to its wholly-owned overseas subsidiaries including PRCO America, Inc., consistently declaring the exports under the tariff code 2504101000 corresponding to natural flake graphite. Subsequently, on 20 October 2023, the Ministry of Commerce and the General Administration of Customs issued a notice stipulating that, starting from 1 December 2023, natural flake graphite may not be exported from China without authorization; exports approved upon examination are to be licensed by the Ministry of Commerce through the issuance of dual-use items and technology export licenses (hereinafter referred to as export licenses).
Qi Changsheng, Meng Qiufeng, and Yao Shuyang arranged for the export of a batch of natural flake graphite to PRCO America, Inc. in November 2023 based on the production needs of the subsidiary. During this period, they accepted Wanhua Logistics’ suggestion and declared the shipment under the tariff code 2504109900 corresponding to other powdered natural graphite, which does not require an export license either before or after the implementation of export controls. Subsequently, the aforementioned personnel continued to acquiesce, condone, and entrust Wanhua Logistics to use the same tariff code 2504109900 for declaration and completion of inspection. Between April 2024 and March 2025, a total of 1,243.55 tons of natural flake graphite were exported (of which 890.80 tons were declared through Wanhua Logistics), and all of these goods were shipped to the company’s overseas wholly-owned subsidiaries.
Following the conclusion of the investigation by the Bayuquan Customs Anti-Smuggling Sub-bureau, the accused entities PRCO and Wanhua Logistics, together with the defendants Qi Changsheng (Deputy General Manager of the Steel Business Division and Head of the Overseas Marketing Department of PRCO), Meng Qiufeng (Deputy Head of the Overseas Marketing Department of PRCO), Yao Shuyang (Head of the Documentation Section of the Overseas Marketing Department of PRCO), and Wang Libo (Legal Representative of Wanhua Logistics), are suspected of the crime of smuggling goods and articles whose import or export are prohibited by the state, having falsely declared a total of 1,243.55 metric tons of natural flake graphite for export. Between May 2025 and September 2025, the Bayuquan Customs Anti-Smuggling Sub-bureau carried out the arrests of the defendants Qi Changsheng, Meng Qiufeng, Yao Shuyang, and Wang Libo.
The People’s Procuratorate of Yingkou City holds that the defendant entities PRCO and Wanhua Logistics, together with the defendants Qi Changsheng, Meng Qiufeng, Yao Shuyang, and Wang Libo, violated customs regulations by, without authorization, concealing the true nature of goods through false declarations so as to evade dual-use items and technology export licensing controls, and smuggled natural flake graphite out of the country. The circumstances are serious. The acts of the aforesaid defendants and defendant entities infringe Article 151(3), Article 151(4), Article 30, and Article 31 of the Criminal Law of the People’s Republic of China. The criminal facts are clear, the evidence is solid and sufficient, and criminal liability for the crime of smuggling goods whose import and export are prohibited by the State shall be pursued.
Puhua Refractories Corporation emphasized that the company has a sound governance structure; this litigation will not significantly affect its routine production and operation. At present, the company’s production and operations are normal, the team is stable, and all tasks are proceeding in an orderly manner.
This lawsuit has not yet been heard, so the outcome remains uncertain, and its impact on the company’s profit is likewise uncertain; the final effect will be subject to the court’s judgment. The company will fulfill its information-disclosure obligations in a timely manner as the litigation progresses. Investors are advised to follow subsequent announcements and pay attention to investment risks.
The company’s previously disclosed 2025 annual report shows that in 2025 it recorded operating revenue of RMB 5.488 billion, up 5.69% year on year; net profit attributable to shareholders of the listed company was RMB 86.59 million, down 35.89% year on year; net profit after deducting non-recurring gains and losses was RMB 71.44 million, down 5.75% year on year.
Data show that PRCO Group was founded in 1988 and listed on the Shenzhen Stock Exchange in 2008, with its headquarters in Puyang County, Puyang City, Henan Province. It is a major domestic supplier and service provider of refractory materials for the steel industry, recognized as a National High-tech Enterprise and a National Green Factory. Its core business is the research, production and sale of shaped and unshaped refractories, functional refractories and matching assemblies, and it owns a National Certified Enterprise Technology Center, a Henan Provincial Enterprise Technology Center, and the only High-temperature Ceramic Materials Engineering Technology Research Center in Henan Province.
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