China Stocks Rally; Power Demand Growth Slows

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
14 Jul, 2010
New York City

Stocks in China region gained. Power consumption grows at a slower pace in June. Zijin Mining agrees for further investigations to find causes for leak. Shougang Corp is close to buying Tonghua Iron & Steel Group.

[R]5:00 PM Hong Kong, China – Stocks in China region gained. Power consumption grows at a slower pace in June. Zijin Mining agrees for further investigations to find causes for leak. Shougang Corp is close to buying Tonghua Iron & Steel Group.[/R]

Stocks in China gained, paring the benchmark index’s biggest drop in a fortnight, on earnings outlook led by automakers.

Hong Kong stocks rose on better-than-expected earnings from Intel and earnings outlook in mainland China.

Hang Seng Index in Hong Kong gained 0.64% or 129.75 to close at 20,560.81. The CSI 300 Index in China gained 0.72% or 19.02 to close at 2,653.61.

China’s power consumption rose at a slower pace in June because of lesser demand from heavy industries, a report from the government showed.

Power consumption in China, the second-largest power consuming nation, increased by about 14% in June, from a year earlier, to 352 billion kilowatt hours, compared to 21% growth in May, the National Energy Administration said today on its Web site.

Zijin Mining Co has accepted that its earlier explanation of heavy rain resulting in an acid spill leading to poisoning of 1,890 tons of fish in the Ting River in Fujian was not an accurate reflection of the event, and said that it will extend its investigation further.

“The accident reflects some deeper issues about the company. We earlier said that the accident was a result of heavy rains, but it is not just that alone. We think further investigations are necessary for which we need to close the plant,” said Zhao Jugang spokesman for the company from Shanghai over phone.

Shougang Corp is close to buying Tonghua Iron & Steel Group, a year after the local government scrapped the previous deal which led to workers killing an executive fearing layoffs.

“The deal will be reached within a few days. The combination of the two state-owned companies is likely to create a steelmaker with a combined production of 22.5 million tons, based on last year’s figures making it China’s sixth-largest steelmaker,” said Wu Jianxin, a spokesman for Shougang Corp.

The Chinese Ministry of Industry and Information Technology has promised to speed up mergers between steelmakers to cut competition and help boost bargaining power for raw materials including iron ore.

Tianjin Bohai Iron & Steel Group was formed yesterday from a combination of four state-owned mills in Tianjin city, the local government said on its Web site today. The new entity was formed from Tianjin Pipe Group Corp, Tianjin Tiantie Metallurgical group, Tianjin Iron & Steel Group Co, and Tianjin Metallurgy Group Co, the government said.