Mainland coal stocks slumped yesterday on investor jitters that new regulatory price caps could eat into producers' profits, but Yanzhou Coal Mining eased some concern saying that its first half profit had probably more than tripled.
Thermal coal prices at key ports such as Qinhuangdao and Tianjin will remain at June 19 levels, the National Development and Reform Commission said yesterday.
'This is a near-term negative for market sentiment as it underlines the risk of government policy intervention to the coal sector,' HSBC analysts, including Sarah Mak, wrote in a research report yesterday.
China Shenhua Energy had its largest one-day drop in more than four months, plunging 6.73 per cent to HK$29.10. The mainland's largest coal producer mirrored declines in the Hang Seng Index yesterday after falling 4.88 per cent on Thursday.
Regulators have monitored coal prices this year since the mainland relies on the resource for more than 80 per cent of its power. Power producers have struggled this year to keep up with prices rises amid supply woes and demand increases in the region. At Qinhuangdao, coal prices hit a record US$154 a tonne in May, according to Bloomberg.
Rising prices have been a boon to producers such as Yanzhou Coal, a unit of the mainland's fourth largest producer, which estimated first half profit rose more than 220 per cent, according to a statement released by Hong Kong Exchanges and Clearing after the market close yesterday.