Yanzhou Coal Mining Co., China’s fourth-biggest producer, rose to the highest in more than seven months in Hong Kong on the prospect of improved earnings as coking coal prices increase.
The stock rose 7.5 percent to HK$13.78, the highest since May 15, at the close. The city’s benchmark Hang Seng Index gained 2.9 percent. China’s stock markets were closed for a holiday.
Yanzhou Coal, which posted a net loss of 79.6 million yuan ($12.7 million) in the third quarter because of a fall in coal prices and a gain in selling costs, may have improved its financial performance in the three months to December as supply disruptions in Asia drive up prices, said Helen Lau, an analyst at UOB Kay-Hian Ltd.
“Logistic disruption caused by the snow storm in North China, Russia and Mongolia has caused tightness in coking coal supplies,” Lau said. “Rising steel prices and iron ore prices in China are also factors that could drive coking coal prices higher in the near term.”
China Shenhua Energy Co., the country’s biggest coal producer, rose 4 percent to HK$35.30, and China Coal Energy Co., the second largest, rose 4.6 percent to HK$8.81.
A recovery in Chinese manufacturing is also lifting the outlook for coal producers, Lau said.
China’s Purchasing Managers’ Index was 50.6 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Jan. 1 in Beijing. The index stayed above 50, a reading that indicates expansion, for the third consecutive month.
“The recovery in industrial activity is definitely good news for coal producers as higher demand usually drives up coal prices,” Lau said.