Chinese aluminium unit Chalco’s H1 profit dives but swift recovery in sight
Dramatic rebound in aluminium prices is set to boost profitability in the second half of 2020
Beijing — Aluminium Corporation of China, or Chalco, said on Thursday profits fell 95% year-on-year in the first half due to lower aluminium and alumina prices, while its primary metal production slipped just below that of Russian rival Rusal.
Chalco, a listed arm of state-owned aluminium firm Chinalco, reported net income of 35.71-million yuan ($5.19m) in January-June, down from an adjusted 707.41-million yuan ($102m) a year earlier, according to a filing to the Shanghai Stock Exchange. 2019's first-half income was boosted by a substantial gain on an asset sale, worsening the drop in earnings in 2020.
The six-month net income figure implies a profit of only 5-million yuan for the second quarter, which would mark Chalco's worst quarterly result since a net loss in the fourth quarter of 2018, according to Refinitiv Eikon data.
In terms of production, Chalco said first-half primary aluminium output was 1.86-million tonnes. That was down slightly from 1.89-million tonnes reported a year earlier and below Rusal's 1.87-million tonnes.
Chalco overtook Rusal as the world's second-biggest listed aluminium producer in 2018.
Parent Chinalco, which is not listed itself but also controls Yunnan Aluminium, is now the world's top producer by capacity, followed by China Hongqiao.
Meanwhile, Chalco's production of aluminium raw material alumina rose 5.74% in the first half to 7.2-million tonnes. The company shut down three alumina production lines in July due to low prices.
Overall first-half revenue fell 11.5% to 84.11-billion yuan as Chalco said Shanghai aluminium prices averaged 4.3% lower year-on-year at 13,191 yuan a tonne, but noted a rebound in the third quarter.
After a coronavirus-driven collapse in early 2020, Chinese demand has recovered dramatically and Shanghai aluminium prices last week hit their highest since April 2018 at almost 15,000 yuan, painting a much rosier outlook for Chalco in the second half of the year.
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