April 15 (Bloomberg) -- New World Resources Plc, central Europe’s largest miner of coal for steelmakers, slumped the most in five months after Citigroup Inc. recommended selling the shares on speculation the company may reduce output.
The stock, the worst performer in the PX index today, fell 7.1 percent to 61.3 koruna by 1:25 p.m. in Prague, after earlier slumping as much as 9.7 percent, the most in five months. Turnover on NWR shares so far today has been triple the three-month daily average.
Citigroup downgraded NWR to sell from neutral, citing a decline in European manufacturing and steel production that stems demand for coking coal. Low prices of the commodity may force the company to slash production or even shut down one of its mines to save on operating costs, Citigroup said.
“Europe is arguably the weakest steel region in terms of end demand and structural overcapacity,” Thomas O’Hara, an analyst at Citigroup in London, said in an e-mailed statement. “The company may need to take action at an operating level if the current environment persists.”
Europe’s benchmark coal contract fell 0.5 percent to $94.35 per metric ton in Amsterdam. The index has lost 16 percent in the past year.
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