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Chalco warns of more losses to come
By Fu Chenghao |
July 28, 2009, Tuesday
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Print Edition
Print Edition
ALUMINUM Corp of China Ltd has warned of a loss for the first half this year but its shares rose amid optimism an economic recovery will boost demand.
China's top aluminum producer, known as Chalco, blamed the global financial crisis for hitting demand from the building and auto industries at home and abroad and lowering aluminum prices.
Chalco had reported a net loss of 1.89 billion yuan (US$277 million) in the first three months of this year and a net profit of 2.41 billion yuan for the first half last year.
The utilization rate of the company's production capacity was low in the first half, it said in a stock exchange filing.
Chalco surged 8.05 percent to 19.33 yuan yesterday on the Shanghai Stock Exchange.
In Hong Kong trading, it gained 4.54 percent to HK$9.22 (US$1.18).
Investors shrugged off the Chalco warning as the loss forecast was not unexpected, and the sector is set to rebound on the back of recovering demand, analysts said.
The industry would get back to a boom period in the fourth quarter, Wang Guansu of Sinolink Securities said in a report.
"While many have concerns about the large size of idled capacity, we think a demand recovery would lead to a substantial rise in aluminum prices in the fourth quarter," Wang wrote.
Aluminum for November delivery, the most active contract on the Shanghai Futures Exchange, rose 5 percent to 14,865 yuan per ton yesterday, after the central government confirmed that it would stick to a loose monetary policy this year.
Sinolink Securities expects domestic aluminum prices to average above 17,000 yuan a ton next year.
China's top aluminum producer, known as Chalco, blamed the global financial crisis for hitting demand from the building and auto industries at home and abroad and lowering aluminum prices.
Chalco had reported a net loss of 1.89 billion yuan (US$277 million) in the first three months of this year and a net profit of 2.41 billion yuan for the first half last year.
The utilization rate of the company's production capacity was low in the first half, it said in a stock exchange filing.
Chalco surged 8.05 percent to 19.33 yuan yesterday on the Shanghai Stock Exchange.
In Hong Kong trading, it gained 4.54 percent to HK$9.22 (US$1.18).
Investors shrugged off the Chalco warning as the loss forecast was not unexpected, and the sector is set to rebound on the back of recovering demand, analysts said.
The industry would get back to a boom period in the fourth quarter, Wang Guansu of Sinolink Securities said in a report.
"While many have concerns about the large size of idled capacity, we think a demand recovery would lead to a substantial rise in aluminum prices in the fourth quarter," Wang wrote.
Aluminum for November delivery, the most active contract on the Shanghai Futures Exchange, rose 5 percent to 14,865 yuan per ton yesterday, after the central government confirmed that it would stick to a loose monetary policy this year.
Sinolink Securities expects domestic aluminum prices to average above 17,000 yuan a ton next year.
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