Singapore 29/08/2016 - Aluminium Corp of China (Chalco) reported a surge in profit to in the first half of this year but has warned of oversupply pressure supply mounting in the domestic aluminium market again in the second half of the year.
Chalco’s profit attributable owners of the parent was at 57.4 million yuan ($8.6 million) in January-June, up 37-times from profit of 1.54 million yuan in the same period last year.
Chalco attributed the increase to a substantial decline in production costs, strict expenditure control as well as gains from asset disposals.
But it warned that oversupply pressures may mount again in the second half of the year - thus suppressing product price - given the rebound of aluminium price and the resumption of domestic alumina and primary aluminium production.
The macro economy is also still under heavy downward pressure especially with uncertainties in the global economy increasing with Brexit, it added.
“Therefore the market situation is still not optimistic,” it said.
Market participants expect Chinese production restarts and new capacity commissoning to concentrate in the fourth quarter of this year leading to rising domestic aluminium inventories and pressure on Chinese aluminium prices.
The aluminium price on the Shanghai Futures Exchange has rebounded by around 30 percent since falling to an all-time low of 9,555 yuan per tonne in late-November last year. The most active October contract closed at 12,345 yuan on Monday, down 25 yuan from last Friday's close.