Singapore 14/03/2016 - Aluminium production at China Hongqiao Group rose by 40 percent to around 4.421 million tonnes in 2015, the company said in its annual report last Friday.
The higher output was driven by increases in downstream market demand and the group’s production capacity, it said.
Hongqiao’s production capacity had risen 28.8 percent to 5.186 million tonnes last year on expansions.
The company’s production of aluminium fabricated products reached around 196,000 tonnes last year, up 4.6 percent compared to the previous year.
Its net profit dropped 31.3 percent to 3.65 billion yuan in 2015. Other than lower aluminium prices, profit was also affected by loss in foreign exchange, and increase in finance costs and administrative expenses, despite rises in production and sales volume, it said.
“Given the slow recovery of the global economy and downward pressure of China’s economic growth, the market is unlikely to turn around within a short period of time. The price of aluminium products is expected to stay in the low range,” said Hongqiao.
Hongqiao’s lower net profit was expected after it issued a profit warning in January.
"We believe Hongqiao’s low production cost and good access to onshore funding should allow the company to gain market share from other players during the current sector downturn," said Credit Suisse in a report on Monday.
In 2015, the company had continued its debt-funded capacity expansion to increase the self-sufficiency rate for electricity and key raw materials like alumina, which resulted in its net debt rising 40 percent in 2015, the bank added.