Huadian, Chinese Power Producers' Stocks Fall on Coal Costs

By Winnie Zhu

Oct. 31 (Bloomberg) -- Huadian Power International Corp. led Chinese electricity suppliers lower in Hong Kong trading after the unit of China's fourth-biggest generator said it may post losses this year.

Huadian Power declined as much as 8 percent to HK$1.38 and traded at HK$1.4 at 10:16 a.m. Datang International Power Generation Co., the nation's second-largest power producer, fell 3 percent to HK$2.96 and bigger rival Huaneng Power International Inc. dropped 2.5 percent to HK$3.85.

The companies had losses in the third quarter as government tariff caps prevented them from passing on rising coal costs to customers. Coal prices in Qinhuangdao, a Chinese benchmark, reached a record 1,080 yuan a ton ($158) on July 23. Huadian Power said late yesterday that it may post losses this year because of ``significant increases'' in costs.

The state-owned utility reported a loss of 874 million yuan in the third quarter, compared with a profit of 355 million yuan a year earlier.

Huaneng Power had a loss of 2.2 billion yuan in the three months ended September, it said Oct. 21. Losses at Datang Power reached 433 million yuan.

China, which caps energy prices to limit impact on inflation, raised electricity tariff twice this year. The increases weren't enough to offset rising costs of coal, power generators have said.

Huadian Power has more than half of its generating capacity in the eastern province of Shandong, the second- largest industrial base in China after Guangdong.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzu4@bloomberg.net