Chalco Q3 profit slumps, aluminium output falls 10%

By Tom Daly

BEIJING, Oct 30 (Reuters) - Aluminum Corp of China Ltd 601600.SS, 2600.HK posted a sharp fall in both aluminium output and sales in the third quarter, data released on Wednesday showed, after the company earlier reported a slump in quarterly profit.

Chalco, the listed arm of state-owned aluminium firm Chinalco, reported a 10.4% year-on-year fall in aluminium production in July-September to 950,000 tonnes, in a data sheet for analysts reviewed by Reuters.

Aluminium sales fell by a steeper 13.8% to 940,000 tonnes, indicating lacklustre demand in China, the world's top consumer of the metal.

The declines comes after Chalco closed a 200,000 tonnes per year plant in eastern China's Shandong province in January due to high electricity costs, and said later it would transfer 190,000 tonnes of capacity from northern China to an affiliate in Yunnan.

Its output still topped Russian rival United Company Rusal 0486.HK, which produced 942,000 tonnes in the third quarter, retaining Chalco's spot as the world's second-biggest listed aluminium producer after China Hongqiao Group 1378.HK.

Production of alumina, which is used to make aluminium, rose by 3.6% year-on-year to 3.41 million tonnes in the third quarter, the data showed. The company did not immediately confirm the numbers.

Chalco late on Tuesday reported an 83.9% fall in third-quarter net profit from a year earlier to 102.61 million yuan ($14.53 million), as higher costs cancelled out an increase in revenues.

Third-quarter operating revenues - which also include alumina chemicals, coal and electricity sales - rose 17.2% year-on-year to 50.77 billion yuan. But this was nearly matched by the total cost of operations, which surged 20.5% to 50.35 billion yuan, the company said in a filing to the Hong Kong stock exchange.

The wafer-thin profit underscores the cost pressures faced by aluminium smelters in China, the world's biggest producer of the metal. Shanghai aluminium prices SAFcv1 have been struggling to hold above 14,000 yuan a tonne, often considered a break-even level. Prices are currently around 13,800 yuan a tonne.

In Wednesday's data sheet, Chalco said its average aluminium sales price in the third quarter was 13,924 yuan a tonne, down 4.2% year-on-year.

The third-quarter result marked Chalco's lowest profit since the fourth quarter of 2017, excluding a net loss in October-December last year.

Profits in the first nine months of 2019 fell 47.7% year-on-year to 808.37 million yuan.

($1 = 7.0630 Chinese yuan renminbi)

(Reporting by Tom Daly, editing by Louise Heavens and Richard Pullin)

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