UPDATE 1-China Molybdenum's Shanghai share sale met by surprisingly weak demand
* Raises 600 mln yuan vs initial plan of 3.65 bln yuan
* Reflects weak outlook for steel sector, sluggish stock market
* China Molybdenum's Hong Kong-listed shares tumble (Adds analyst comment, details)
By Kazunori Takada
SHANGHAI, Sept 21 (Reuters) - China Molybdenum Co Ltd raised just one-sixth of its initial fundraising plan through a share offering in Shanghai, reflecting concerns over steel-related firms amid a slowing economy and sending its Hong Kong-listed shares down sharply.
The producer of tungsten and molybdenum, which are used in steel products, raised 600 million yuan ($95 million) after selling 200 million shares at 3 yuan apiece, it said in a filing to the Shanghai stock exchange late on Thursday.
The company had said it was planning to raise 3.65 billion yuan by selling up to 542 million shares to build new projects.
The surprisingly weak result was a reflection of bearish views over China's steel sector and a sluggish stock market, analysts said.
"There's a lot of uncertainty over steel and where steel demand is going to be in China and moly, of course, is the main end mark," said a Hong Kong-based based analyst who declined to be named because he was not allowed to speak to the media.
China Molybdenum shares were trading down 7.6 percent at HK$3.3 as of 0200 GMT in a broadly firmer market.
Chinese steel-related firms have been struggling to post profits this year as slowing economic growth has eroded demand from key downstream sectors like real estate and automobiles. They are also struggling with long-term structural issues including chronic overcapacity.
Executives at Baoshan Iron and Steel, China's biggest listed steelmaker, speaking after posting a 53 percent drop in first half profit last month, said the firm expected the third quarter to be the "most difficult" of the year, although it should avoid any losses over the period.
Reuters data showed companies in China's coal, steel and heavy machinery sectors saw a 20 percent increase in the amount of money clients owe to them, pointing to an industrywide shakeout that threatens to put some smaller firms out of business.
The sluggish performance of China's stock market has dented investor appetite for new share issues, forcing a number of companies, including China Communications Construction Co Ltd and CITIC Heavy Industries Co, to either postpone offerings or downsize their deals.
China Molybdenum recorded a net profit attributable to shareholders of 720.7 million yuan in the first half of this year, it said. Its profit rose 9.6 percent in 2011 to 1.12 billion yuan, it said, but gave no breakdown for the first half of 2011.
The company is the latest Chinese firm to tap mainland investors for funds after initially going public in Hong Kong.
Essence Securities and BOC International (China) Ltd were the underwriters for the deal, while UBS and CCB International acted as financial advisers. ($1 = 6.3038 Chinese yuan) (Additional reporting by Chen Yixin and Pete Sweeney; Editing by Chris Gallagher)