Steel, coal firms continue to drag market down

By Lydia Chen  |   2008-6-5  |     ONLINE EDITION

SHANGHAI'S key stock index continued to fall today as steel makers and coal producers slid on speculation price controls will hurt earnings.

The Shanghai Composite Index lost 0.54 percent, or 18.27 points, to 3,351.65 at 3pm. The index is comprised of yuan-denominated A shares and hard-currency B shares.

Losers in the Shanghai market outnumbered gainers 499 to 284 while 23 were unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 0.95 percent, or 9.73 points, to 1,011.62.

China Shenhua Energy Co and Shanxi Xishan Coal & Electricity Power Co led the declines among coal producers. Baoshan Iron & Steel Co dropped after it said it will keep prices unchanged in the third quarter.

China Shenhua Energy Co, the nation's biggest coal producer, slumped 6.15 percent to 42.87 yuan (US$6.18) and Shanxi Xishan Coal & Electricity Power Co sank 3.59 percent to 52.14 yuan.

China's Shandong Province yesterday imposed "temporary'' caps on power-station coal prices before peak summer demand and the Olympic Games in August. Shandong-based Yanzhou Coal Mining Co. dropped 9.26 percent to 21.35 yuan.

Baoshan, China's biggest steel maker, lost 3.43 percent to 11.54 yuan while Anshan Iron & Steel Co slid 1.75 percent to 19.65 yuan.

Baoshan said it will keep third-quarter prices unchanged after the government ordered domestic mills to hold prices at the same level as before the May 12 earthquake.

The National Development and Reform Commission, the country's top economic planning body, has set up a panel that will take charge of coal and oil price controls. It will "strictly'' crack down on illegal price increases by coal miners after the earthquake and eliminate charges by middle-men, the Beijing Times reported today, citing an unidentified government official.