Prices have fallen close to production costs while China’s tightening monetary policies make financing increasingly difficult, Luo said in a statement posted on the company’s website today. Profit at the company known as Chalco (2600) fell in September from a month earlier, even as third-quarter net income had a “large increase,” he said, without elaborating.
Aluminum prices in London have dropped 23 percent from a high in May on concerns that the European sovereign-debt crisis and a slowdown in the U.S. economy may curb demand for commodities. Premier Wen Jiabao said China will maintain tight monetary policy to curb high inflation, according to a statement posted on the government’s website on Oct. 22.
“Our customers are also short of capital,” Luo said in the statement. “That has increased the risk of payment defaults. Ensuring financial security is currently the main task of our top managers.”
Aggregate financing, which includes bank lending, off-balance sheet loans and bond and stock sales, dropped 11.4 percent to 9.8 trillion yuan ($1.5 trillion) in the first nine months from a year earlier, the central bank said on Oct. 20.
Aluminum Corp. of China, Chalco’s parent, will “strictly” control project investments and will be “prudent” with acquisitions amid a slump in metal prices, General Manager Xiong Weiping said on Oct. 11.
Chalco advanced as much as 6.4 percent to HK$3.83 today in Hong Kong trading and was at HK$3.82 at the midday break, up 6.1 percent. The company will report third-quarter earnings after the market close tomorrow.
China’s economy grew 9.1 percent in the third quarter from a year earlier, the slowest pace since 2009, on weaker export demand and monetary tightening.
--Helen Yuan. Editors: Ryan Woo, Baldave Singh.
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