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Mechel slides in US Trading on coal outlook as China slows

Steel News - Published on Thu, 08 Mar 2012

OAO Mechel Russia largest producer of coal for steelmakers, slid the most in three months in US trading on concern demand for the commodity will decline as Chinese economic growth slows.

Mechel American depositary receipts tumbled 8.1% to settle at USD 9.70 in New York the biggest one day drop since December 19. The ADRs are trading at a 2.1% discount to the company Moscow-listed shares. Mechel is the biggest decliner on the Bloomberg Russia US 14 index of Russian companies traded in the US today.

According to equity analyst Mr Vasiliy Kuligin that China cut its economic growth forecast to the lowest since 2004 as the European debt crisis and sluggish US recovery dim the outlook for the world biggest exporter. Moscow based Renaissance Capital expects coking coal prices to average USD 219 per tonne in 2012 compared with USD 289 last year.

Mr Kuligin said “Mechel makes most of its revenue from selling coking coal. China won’t need as much coking coal as was previously thought and the coking coal price will continue to weaken, hurting Mechel further.”

While Renaissance has a quite bearish view on Mechel, it is retaining a hold recommendation on the stock.

Source - Bloomberg


Posted By : admin on Thu, 08 Mar 2012
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