Aluminum Giant Chalco Books Healthy Profit on Post-Covid Rebound

Aluminum Corp. of China Ltd. (Chalco), the nation’s biggest producer of the nonferrous metal, reported strong profit growth in its latest quarterly results, as it benefitted from rebounding prices and an ongoing internal campaign to boost efficiency.

The company’s profit for the three months through September totaled 416 million yuan ($62 million), roughly quadruple the level from the same period a year earlier, according to its latest results released after the market closed Tuesday. That marked a strong improvement from the first half of the year when its net profit totaled 35.7 million yuan, down around 95% from the same period of 2019.

Revenue for the latest three month period totaled about 49 billion yuan, down slightly from 50.8 billion yuan a year earlier.

Aluminum producers were just one of many types of manufacturers that took a hit in the first half of the year as Covid-19 first took hold in China and spread to the rest of the world, disrupting commercial activity globally. China’s situation began to improve in the second quarter as the nation brought its outbreak under control and many activities restarted.

Chalco also benefitted from renewed spending on infrastructure and real estate, areas often favored by the central and local governments when trying to stimulate economic activity.

The price for the main aluminum contract on the Shanghai Futures Exchange hit a low of 11,200 yuan per ton in April at the height of China’s slowdown, and has been on the rebound since then. It has been at the 14,000 yuan level or higher since July, and hit a high of nearly 15,000 yuan per ton in the third quarter.

Chalco has also benefited from a campaign this year to lower costs and increase efficiency — a common theme in many of the nation’s oversupplied traditional sectors like steel and coal. That campaign helped it drive down costs for producing its alumina and electrolytic aluminum by 7.83% and 5.82% in the first three quarters, compared with a year earlier. The company’s overall costs totaled about 131 billion yuan for the first nine months, 10.23% lower than a year earlier.

Chalco’s Hong Kong-listed shares were down nearly 3% late in Wednesday’s trading day, while its Shanghai-listed shares were up about 0.7%.

Contact reporter Yang Ge (geyang@caixin.com)

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