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March 21, 2011

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Buyers told to ask for refunds as salt panic ends

CHINA'S salt sales have returned to normal after last week's panic buying and price authorities have said customers should ask for refunds if they felt they had been overcharged.

Data tracking nine major retail companies in Shanghai showed that salt sales dropped 65 percent on Saturday from a day earlier to 21,600 packs, the normal level for the weekend.

A restriction of two packs for each customer was withdrawn on Saturday afternoon due to sufficient supply and a drop in demand.

Shanghai's price authorities have pledged to punish speculators in salt. Customers who were overcharged for salt should call the price hotline on 12358, and local authorities would order retailers to pay back the difference on production of a receipt.

City authorities said that retailers who had violated price policies would be fined by up to as much as 2 million yuan (US$305,000), and those involved in hoarding and speculating would face a fine of up to 3 million yuan. At least 12 cases of illegal price rises had been reported, according to the Shanghai Development and Reform Commission.

The salt panic was triggered by false claims, following the Japanese nuclear disaster, that iodized salt could help ward off radiation poisoning.

There were also rumors that radiation would contaminate future supplies of sea salt.

Meanwhile, investors in Zhejiang and Jiangsu provinces are suspected of having started the panic.

Local media in Zhejiang's Ningbo and Shaoxing cities were the first to notice a shortage of salt last Wednesday, and data released by Shenzhen Stock Exchange showed unusually active trading of shares in the Yunnan Salt & Chemical Co over the next two days. The five most active brokerage outlets are all in Zhejiang and Jiangsu provinces.

Market watchers suspect that investors there first snapped up salt in local supermarkets, which fanned the panic buying, and then bought shares of the salt producer to drive up prices.

"Speculators wanted to attract unconscious investors to buy shares at high prices, so that they can gain money by selling shares," said Liu Jingde, a senior researcher with Cinda Securities.

The Yunnan-based salt producer jumped by the daily limit of 10 percent when the market opened, just as the salt buying panic started to spread across China.


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