JINDUICHENG Molybdenum Group yesterday made a better-than-expected trading debut in Shanghai when its shares surged more than 36 percent as investors sought the stock banking on demand for the metal from steel makers.

Shares of Jinduicheng closed 36.09 percent higher at 22.55 yuan (US$3.22), near an intraday high of 22.68 yuan. Asia's biggest molybdenum maker raised 8.9 billion yuan in last week's IPO.

The closing price exceeded analysts' forecast of between 18 yuan and 22 yuan and reflected strong investor interest in the firm despite weak overall confidence. The benchmark index in Shanghai lost 2.09 percent yesterday.

"The closing price is quite strong under the current lackluster broader performance (of the market)," said Wu Ke, a Zhongtian Investment Consulting Co analyst. "It shows investors' upbeat view about the firm's growth potential."

Jinduicheng's production of molybdenum accounted for 7 percent of the world's total output in 2006. Molybdenum is a metal that is used to harden alloy steel and serves as a catalyst for chemical manufacturing.

Hong Kong-listed shares of Jinduicheng closed 3.83 percent higher at HK$7.59 (97 US cents) yesterday, making them trade at a 70 percent discount to their Shanghai peers. The firm has proposed to use 7.65 billion yuan of the proceeds to boost capacities and for acquisitions.

Analysts are generally optimistic over the firm's earnings growth but warned of the industry's cyclical nature.

''The investment risks also include the price volatility of molybdenum and the rising yuan, which will dent export growth,'' Wang Shijie, a Shenyin Wanguo Securities Co analyst, wrote in a note.