OAO Mechel, Russia’s largest producer of coal for steelmakers, slid the most in three months in U.S. trading on concern demand for the commodity will decline as Chinese economic growth slows.
Mechel’s American depositary receipts tumbled 8.1 percent to settle at $9.70 in New York, the biggest one-day drop since Dec. 19. The ADRs are trading at a 2.1 percent discount to the company’s Moscow-listed shares. Mechel is the biggest decliner on the Bloomberg Russia-US 14 index of Russian companies traded in the U.S. today.
China cut its economic growth forecast to the lowest since 2004 yesterday as the European debt crisis and sluggish U.S. recovery dim the outlook for the world’s biggest exporter. Moscow-based Renaissance Capital expects coking coal prices to average $219 a metric ton in 2012, compared with $289 last year, according to equity analyst Vasiliy Kuligin.
“Mechel makes most of its revenue from selling coking coal,” Kuligin said by phone from Moscow. “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.
Mechel’s ADRs, which lost 71 percent last year, have gained 14 percent in 2012. The company’s stock listed on Moscow’s Micex Index lost 10 percent to 293.70 rubles yesterday, or the equivalent of $9.91. One ADR represents one ordinary share.