- Joins Rusal in reporting weaker second quarter earnings
- Aluminum prices languish near six-year lows on China glut
Aluminum Corp. of China Ltd. the nation’s second-biggest producer, warned that low aluminum prices would weigh on operations for the rest of the year after swinging to a profit in the first half.
The company, known as Chalco, joined the world’s largest aluminum maker, United Co. Rusal, in reporting a weaker second quarter in response to prices of the metal languishing near six-year lows.
While net income of 27.6 million yuan ($4.3 million) in the six months ended June was better than the 4.12 billion yuan loss of a year ago, it represented a reversal from a first quarter gain of 63.1 million yuan, according to a statement from the company on Thursday.
“Chalco’s earnings were hit by weak aluminum prices and the company will continue to struggle with the low prices,” Helen Lau, an analyst at Argonaut Securities Asia, said by phone from Hong Kong.
Chalco estimated that China, the world’s biggest user, was oversupplied with aluminum by 710,000 metric tons in the first half. Capacity utilization was 82 percent, compared with 79 percent globally.
“The market in the second half will remain difficult as high capacity utilization and low prices in China’s aluminum industry continue,” the world’s fifth-biggest smelter said in its statement.
Earlier Thursday, Rusal reported a 46 percent drop in second-quarter profit from the previous three months and postponed a decision on paying its first dividend since its initial public offering five years ago.
Chalco was 3.9 percent higher in Hong Kong at HK$2.65 as of 11:13 a.m., benefiting from a broader rally in stocks and commodities underpinned by China’s measures to stimulate its beleaguered economy and markets.
— With assistance by Alfred Cang