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LCY Chemical shares stabilize after steep plunge

TAIPEI -- Shares of LCY Chemical Corp. (李長榮化工) showed signs of stabilizing Tuesday after plunging for seven straight sessions because of the company's potential liability for the deadly gas explosions that staggered Kaohsiung late last month, dealers said.

The stock is now expected to remain in consolidation mode until the chemical company's legal and financial responsibilities from the blasts become clearer, they said.

Propene that leaked from one of LCY Chemical's pipelines is believed to have triggered the July 31 explosions, which left 30 dead, more than 300 injured and caused substantial property damage.

Shares of LCY Chemical fell 0.66 percent to close at NT$15.05 (US$0.50), with 17.85 million shares changing hands on the Taiwan Stock Exchange, where the weighted index fell 0.11 percent to close at 9,163.12.

LCY Chemical shares opened lower on follow-though selling to the day's low of NT$14.90, but buying emerged to help the stock climb from the red and rise to the day's high of NT$15.35 before falling back at the end of the session, dealers said.

“After recent heavy losses, the stock simply staged a technical rebound at one point during the session,” Asia Securities Investment Consultant analyst Chang Chih-cheng said.

Before Tuesday's decline, shares of LCY Chemical had fallen by the market's maximum daily decline of 7 percent for seven consecutive sessions, driving the stock's value down almost 40 percent since the July 31 blasts.

Chang said the selling pressure on LCY Chemical shares that built up following the explosions has almost been completely digested.

“I do not expect any plunge in its share price any time soon. The stock may now move within a narrow range as it has turned technically fragile,” Chang said.

“More importantly, it is unlikely for LCY Chemical shares to stage a quick comeback because many investors remain concerned over the potentially heavy financial burden the chemical company will have to shoulder once the investigation is wrapped up,” Chang said.

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