Zinc producer takes a tumble after profits slump

By Theresa Tang  |   2008-8-8  |     NEWSPAPER EDITION

HUNAN Nonferrous Metals Corp, China's biggest zinc and tungsten producer, fell to its lowest since its trading debut in Hong Kong more than two years ago after saying first-half profits fell "significantly."

Hunan Nonferrous dropped 11.4 percent to HK$1.56 (19 US cents) at the 4:10pm close. That's also lower than its initial public offer price of HK$1.65 in 2006. The city's benchmark Hang Seng index rose 0.7 percent.

Slowing global economic growth is hurting demand for zinc and nickel as stockpiles increase. Manufacturing in China, the world's fastest-growing major economy, contracted for the first time since a survey began in 2005 as export demand faltered and factories closed to clear the air before the Olympic Games.

"There are more signs showing metals demand from China and India may not be as strong as expected," Wayne Fung, a Hong Kong-based analyst at Everbright Securities Co, told Bloomberg News. "Outlook for Hunan Nonferrous and other smelters is not good as margins are expected to be squeezed further."