Though Chalco’s Production Fell In Q1, Profits Rose By 46 Percent

Though Chalco’s Production Fell In Q1, Profits Rose By 46 Percent

Thanks to recently weak prices, Aluminum Corp of China Ltd. (Chalco) reported a drop in first-quarter aluminium production of 6.9 percent on the year.

Per a data sheet sent to analysts earlier this week, Chalco smelted 950 thousand metric tons of primary aluminium in the opening three months of the year, off from last year’s first-quarter output of 1.02 million metric tons.

However, despite a drop-off in production for the quarter, Chalco reported a 46-percent rise in profits on the year to CNY444.9 million (US$66.08 million), largely due to assets sold earlier this year. Adjusted net profit in last year’s first quarter came to CNY304.5 million, while the firm posted a net loss of CNY626 million over last year’s closing quarter. Chalco benefited in the first quarter from CNY415.3 million in income from the disposal of subsidiaries, joint ventures, and associates.

Revenue for the quarter totaled CNY44.11 billion, good for a 20.1-percent rise on the year. Alumina production was up as well, rising by 10 percent over last year to 3.51 million metric tons.

Though the firm leapfrogged Rusal for the title of world’s second-biggest aluminium smelter, Chalco may struggle to match last year’s aluminium output of 4.17 million metric tons after shuttering capacity late last year and earlier this year, including the closing of a 200-thousand-metric-ton-per-annum plant in Shandong.

Nevertheless, Chalco continues to remain ahead of Rusal in production at the moment, after Rusal announced earlier this week a first-quarter primary aluminium production total of 928 thousand metric tons.

Chalco may well anticipate positive numbers at the end of the current quarter. After last quarter’s largely tepid prices at the Shanghai exchange remained below the CNY14,000/metric ton magic number that represents the break-even point for the average Chinese smelter, this quarter has seen a 3.4-percent rise in prices over the first quarter, with prices closing in on CNY14,200/metric ton, thanks largely to a boost in domestic demand.