Chalco predicts the future, announces big loss
Chalco yesterday announced its quarterly results, and took time out to make predictions on alumina and metal production and prices. Here’s Reuters’ article on the announcement.
SHANGHAI, Aug 25 (Reuters) – Aluminum Corp of China Ltd (Chalco), the world’s No. 3 alumina maker, expects alumina output this year to fall 11 percent from 2008 to 8 million tonnes, a senior executive said on Tuesday.
Chalco, also China’s largest primary aluminium producer, expected to produce 3.4 million tonnes of aluminium, up 5 percent from a year earlier, Luo Jianchuan, the company’s president, told a press conference.
“Since the second quarter, recovering prices have encouraged Chinese companies to partially restart idled capacity,” said Luo, adding that Chalco had restarted 670,000 tonnes of alumina production capacity, and was now running at 67 percent of its total capacity.
The company had also restarted 310,000 tonnes of aluminium production capacity, and was running at 83 percent of total capacity, Luo said.
“Many production lines are getting ready to restart, or have already restarted a little,” said Liu Xiangming, vice president of the company.
“But we need to take a long-term view, and consider the market fluctuations, consider the impact on prices brought about by increasing recovered production capacity.”
Chalco expects China to import 5.5 million tonnes of alumina this year.
Chalco posted a bigger-than-expected loss for the second quarter, its third consecutive quarterly loss due to weak demand and low prices of aluminium, in the aftermath of the financial crisis which unfolded last year.
“We must work hard not to lose money in the second half and from the full year perspective we will try to cut the losses that we saw in the first half,” said Xiong Weiping, chairman and chief executive officer of Chalco.
“China’s aluminium industry has entered a phase with excessive production capacity and fierce competition. But in the long term, the aluminium industry is still a sunrise industry.
He added that demand for the metal would increase as urbanisation and industrialisation grow with economic development.
Chalco expects global aluminium prices to hold in a range of $1,800 to $2,300 a tonne for the rest of the year, Luo said.
LME aluminium price MAL3 is trading around $1,920 a tonne.
Luo expected domestic prices to range from 14,000 yuan ($2,049) to 16,000 yuan per tonne.
Chalco is finalising power fees with suppliers directly, expecting a breakthrough by the end of this year, Vice President Liu said.
Beijing has introduced a pilot scheme to allow big electricity users to buy power directly from generators, offering a chance for some companies in power-intensive industries, such as Chalco, to reduce power fees and cut production costs.