Commodity Producers Decline on Earnings: China Overnight

Chinese stocks fell the most in a week in New York as PetroChina Co.’s lower-than-estimated 2012 earnings stoked concern other commodity producers will also report disappointing results.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. dropped 1.1 percent to 91.35 yesterday for the biggest decline in six days. Yanzhou Coal Mining Co. slid to a six-month low and China Petroleum and Chemical Corp. sank the most in six weeks before earnings release scheduled for today. PetroChina slipped 2 percent, while Suntech Power Holdings Co. tumbled to a record low after banks petitioned for its bankruptcy.

PetroChina, the country’s biggest oil producer, posted lower-than-forecast profit in 2012 as refining losses and import costs outpaced growth in production. China, which has capped retail fuel and natural gas prices to contain inflation, may cut gasoline and diesel prices next week, commodity researcher ICIS C1 Energy said yesterday. China Petroleum, Asia’s biggest refiner, will post a 16 percent drop in 2012 net income today, according to analyst estimates collated by Bloomberg.

“Weakness in commodity prices may be a signal that the outlook for Chinese demand is not strong, which has impacted the shares of energy and commodity producers,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by phone. “We really haven’t seen good earnings so far, with more companies missing consensus than beating them, and guidance not that strong.”

Oil Prices

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., retreated 1.1 percent to $36.84 in New York, after jumping the most in two months the previous day. The Standard & Poor’s 500 Index dropped 0.8 percent to 1,545.80.

Crude prices have lost 14 percent over the past year on the New York Mercantile Exchange, while coal futures have dropped 3.8 percent.

Yanzhou Coal, China’s fourth-largest coal miner, declined 2.6 percent to $13.78 in New York, the lowest closing level since Sept. 6.

PetroChina’s American depositary receipts slid to $132.11, the lowest since Dec. 3. Net income dropped 13 percent to 115.3 billion yuan ($18.6 billion) last year, the state-owned company said in a statement to the Hong Kong stock exchange yesterday. That compared with the 119.8 billion yuan mean of 27 analyst estimates compiled by Bloomberg.

Sinopec Sinks

Gasoline and diesel prices in China are set by the National Development and Reform Commission under a system that tracks the 22-day moving average for a basket of crudes, comprising Brent, Dubai and Indonesia’s Cinta. Former NDRC Chairman Zhang Ping said March 6 that the body plans to shorten the fuel price adjustment window.

China Petroleum, known as Sinopec, sank 2.6 percent to $111.64 in U.S. trading, the biggest decline since Feb. 7. The Beijing-based company may report net income of 61.8 billion yuan for 2012, according to the median of 16 analysts’ projections compiled by Bloomberg, from 73.2 billion yuan for 2011.

Suntech, the world’s largest solar-panel maker in 2011, plunged 25 percent to 44 cents in New York, extending its loss this week to 37 percent. The company said a court in China accepted the petition of eight banks to push its main operating subsidiary into insolvency.

Trading volume on the company’s ADRs was six times the daily average over the past three months, data compiled by Bloomberg showed.

Yingli Green Energy Holding Co., the biggest silicon-based solar panel maker by capacity, based in Baoding, China, fell 7.9 percent to $2.32. Trina Solar Ltd., based in Changzhou, slipped 3.3 percent to $4.05 in New York.

The Hang Seng China Enterprises Index slid 0.3 percent to 10,944.35 yesterday, slipping from a three-day high. The Shanghai Composite Index of domestic Chinese shares added 0.3 percent to a two-week high of 2,324.24, rallying a third day.