State-owned aluminium producer Aluminum Corporation of China Ltd. (Chalco) released its annual report for fiscal year 2016 yesterday. The year witnessed a doubling in profit for the firm due in part to a rebound in aluminium prices and a drop in production costs.
Chalco recorded a net profit of CNY402 million (USD58.5 million), which was a significant year-on-year improvement over 2015’s total of CNY148.6 million.
“The increase in profit was mainly due to power reforms and stronger operations, which helped lower production costs of alumina and electrolytic aluminium products by about 12 percent and 17 percent respectively,” said the company in a statement.
“In terms of the international market, benefiting from the improving macro risk appetite in the global market in 2016, the fundamentals of bulk commodities showed a favorable trend on the whole and prices of non-ferrous metals bounced back from the low at the beginning of the year,” explained Chalco’s chairman Yu Dehui.
“In terms of the domestic market, as affected by the traditional off season, holidays and festivals and other factors, the domestic price of aluminum futures showed a sluggish trend and fluctuated slightly on the whole at the beginning of the year; while during the same period, thanks to the flexible production implemented in succession by the domestic electrolytic aluminum enterprises at the end of 2015, the domestic price for spot aluminum stayed firm, which gave support to the price of the aluminum futures to some extent. After the Spring Festival, the domestic price of the aluminum futures rebounded rapidly upon a slight decrease, which was in striking contrast with the price plunge after the Spring Festival in the past years,” he went on.
Going forward the company announced an investment of up to CNY700 million (USD102 million) of a CNY3.9 billion (USD566 million) joint venture to produce light alloys in Guizhou province in southwest China.