Chalco Increases Aluminium Output to Fill Void Left by Competitors’ Capacity Cuts

In an earnings call yesterday, Aluminium Corp of China Limited (Chalco) told investors that the firm increased production by 250 thousand metric tons in the first half of the year in a bid to capture market share lost due to capacity cuts by competitors in the private sector.

Chalco’s president Ao Hong made the remarks in question and went on to say that the firm would continue to invest in capacity output over the course of the year’s latter half. Although he declined to give numbers, Ao indicated that the output increase would be gradual and make little impact in the firm’s second-half numbers.

Ao said later on the call that Chalco’s nameplate capacity is 5 million metric tons per annum. However, Chalco’s equity production is less than that due to the fact that some provinces own the capacity that Chalco operates.

He continued by saying that the state-owned firm is following government mandates on supply-side reform, but that those reforms are not likely to have a significant impact on his company.

The firm didn’t offer first-half production numbers, but AZ China estimates that Chalco churned out 2.95 million metric tons of primary aluminium last year, and that this year’s total will likely rise by 15 percent to 3.39 million metric tons.

Ao also said on the call that capacity construction is currently underway, but “we cannot give you very specific numbers” due to the fact that government approval of the capacity is still outstanding.

Chalco reported an improved bottom line in the first half of this year, turning in a ten-fold improvement in net profit over last year. The firm credits the increase on a global recovery of aluminium prices.



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