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Daqin Railway sees sharp decline in share prices

By Zhao Qian (Global Times)

08:50, August 10, 2012

Shares in Daqin Railway Co, China's largest provider of railway coal transportation, have seen a double-digit decline in the last two months, which is largely a result of the sluggish coal market, industry insiders said Thursday.

Shares in Daqin Railway closed at 6.06 yuan ($0.95) Thursday, a decline of 0.16 percent from the previous day, and a drop of 17.32 percent compared with two months ago.

A slump in demand for coal amid the recent economic slowdown has led to a drop in rail freight demand, which has affected the railway company's stock performance, industry watchers said.

Daqin Railway is one of China's most important coal transportation railways. It connects Datong in North China's Shanxi Province, the country's major coal production area, with the port of Qinhuangdao in North China's Hebei Province, the country's largest coal port.

"The daily coal transportation volume by Daqin Railway to the port declined by around 20 percent over the last two months," An Zhiyuan, the information director of the official website of Qinhuangdao Ocean Shipment Coal Market affiliated to Qinhuangdao Port Co, told the Global Times Thursday.

The port has also witnessed a dramatic increase in coal stockpiles over the past months, according to An.

The total transportation volume for Daqin Railway's top five customers, which are all large-sized companies such as Chinacoal Pingshuo Group, accounted for 34 percent of its total sales volume in 2011, according to the freight company.

The other customers are mostly small-sized coal distributors, who are experiencing difficult times because of the drop in demand.

"Last year, the small-sized coal distributors had to compete to apply for Daqin Railway carriages. But recently, Daqin Railway has had to ask the coal distributors whether and when they need railway wagons," Li Chaolin, a coal and energy industry analyst at Henan Shenhuo International Trade Ltd, told the Global Times Thursday.

Rising imports due to a drop in international coal prices have added to the sliding transportation volume for Daqin Railway, said Lin.

Daqin Railway's stock price was 7.57 yuan per share in late May, when the National Development and Reform Commission and the Ministry of Railways raised national average rail freight prices by 0.01 yuan per ton per kilometer to cover increased transportation costs.

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