Surge on talk of stimulus plan
Steel shares surged 4.45 percent on average today as some local newspapers reported on the government's as yet unreleased stimulus measures for the industry.
Liuzhou Iron and Steel (SH:601003) surged 10 percent even after the company reported a projected 98 percent fall in profits. Bao Steel (SH:600019) climbed 4.18 percent.
According to the reports, detailed measures to support the steel industry were finalised by the government yesterday in a document to be released officially before the weekend.
Pre-releasing information to the (state-controlled) press, would suggest the government is moving to support certain stock prices.
According to the reports, China will cut steel production by 20 production, setting annual production limits to 500m tonnes until 2010 by closing small blast furnaces and converters.
Mergers and acquisitions will also be encouraged, with Bao Steel, Angang and Wuhan Iron and Steel to be required to accumulate capacities of 50m tonnes each through M&A activity by 2011.
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