BEIJING, Oct. 19 (Xinhua) -- The share price of Baotou Steel Rare-Earth Hi-tech Company, China's leading rare earth producer, plunged after it announced that its rare earth refineries would suspend production for one month as of Tuesday.
Baotou Steel Rare Earth said in a statement filed with the Shanghai Stock Exchange that the company would stop raw materials supply for its smelting and separation units "in order to balance the supply and demand of rare earths".
The company's shares opened flat but soon plummeted as investors felt uncertain about its prospects after the production halt. Around 10:30 a.m., Baotou Steel Rare Earth plunged 4.59 percent to 45.32 yuan per share.
Rare earth prices went skyrocketing in the first half this year driven partly by market speculation. In the third quarter, prices fell sharply as demands for rare earth was severely hurt.
The rare-earth extraction quota is set at 93,800 tonnes for 2011, according to the country's Ministry of Land and Resources. But most rare earth companies had used up their quotas in early July.
In August, China Minmetals Non-ferrous Co. Ltd., another major rare earth producer, called on domestic rare earth separating companies to suspend production due to exhausted output quota.