Chinese Coal Stocks, Shenhua Rise on Higher Crude, Inflation

By Bloomberg News

Oct. 13 (Bloomberg) -- China Shenhua Energy Co. led gains among Chinese coal producers in Shanghai trading after crude oil prices rebounded and on speculation inflation will make resource-related assets more appealing.

Shenhua, the country’s biggest coal producer, climbed 2.5 percent to 33 yuan as of 1:26 p.m., set for the highest close in three weeks. China Coal Energy Co., the No. 2, advanced 1.8 percent to 12.32 yuan. Datong Coal Industry Co., the third- largest, gained 5.8 percent to 39.45 yuan.

A measure tracking energy stocks climbed 2.2 percent today, the most among the 10 industry groups of the CSI 300 Index. China’s benchmark Shanghai Composite Index added 0.6 percent.

“In China, coal stocks are regarded as a proxy for oil producers,” said Wang Ye, chief coal analyst at Citic Securities Co. in Beijing. “So you can expect a good performance of coal stocks when oil prices rise. In addition, the inflation expectation has also made resource stocks like coal more attractive.”

Crude traded at $73 a barrel in New York in after-hours trading, after settling yesterday at a seven-week high of $73.27. Coal prices at Qinhuangdao port, a benchmark in China, the world’s biggest producer of the fuel, rose for a fourth week.

The price of coal with an energy value of 5,500 kilocalories a kilogram gained 0.8 percent to between 600 yuan ($88) and 615 yuan in the week ended Oct. 12, compared with the last assessment, according to data published by the China Coal Transport and Distribution Association.

Inflation in China may accelerate to at least 4 percent by the middle of next year because of an increasing supply of money and rising costs for food and property, Deutsche Bank AG said last month. Consumer prices fell 1.2 percent from a year earlier in August.

--Zhang Shidong and Winnie Zhu. Editors: Mark McCord, Linus Chua.

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net; Winnie Zhu in Shanghai at +86-21-5695-9460 or wzhu4@bloomberg.net