China Steel Corp (中鋼), the nation's largest steelmaker, said it planned to buy back 200 million of its own shares -- four days after the stock closed at its lowest level in more than two years.
The firm may buy the shares until Feb. 20 at NT$16.8 (US$0.51) to NT$37.9 each, the company said in a statement yesterday.
China Steel wants to buy back shares ``because the stock price plunged deeply recently and the company has a lot of cash on its hands,'' said Shawn Wang, an analyst at KGI Securities Co (
Steel prices in China, the world's largest user of the alloy, have fallen more than a fifth this year because of increased output. China Steel executive vice president Chung Lo-min (鍾樂民) called the market "bleak" in a Nov. 25 interview.
A purchase of 200 million shares for NT$16.8 each would cost NT$3.36 billion, while buying the same amount for NT$37.9 each would cost NT$7.58 billion. The company had NT$12.8 billion in cash and equivalents at the end of September, according to the Taiwan Stock Exchange's Web site.
China Steel is planning to cut prices again in the three months starting next month, the company said last month, after reductions this quarter which were the first in about three years.
China Steel closed at NT$23.95, a gain of 1.1 percent, before the purchase plan was announced.
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