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Chalco: Profit Pressure Increasing As Aluminum Prices Decline
Oct 25,2011 11:10CST
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Source:SMM
Aluminum Corp. of China Ltd. said Monday the pressure on the company's profitability is growing as aluminum prices have fallen amid the uncertain global economic environment.

BEIJING, Oct 24, 2011 (Dow Jones) -- Aluminum Corp. of China Ltd.(2600.HK), the country's biggest producer of the metal, said Monday the pressure on the company's profitability is growing as aluminum prices have fallen amid the uncertain global economic environment.

Chalco President Luo Jianchuan said in a statement on the company's website that some of the firm's units will face "severe challenges" in cash flows if product prices continue to fall, even as the company will swing to a net profit for the third quarter compared with a year earlier.

The company is due to post its third-quarter results on Wednesday. It reported a net loss of CNY117.8 million a year earlier.

The slow recovery in the U.S. and sovereign debt crisis in Europe have hurt commodity prices, Luo said, adding monetary tightening in China has created financing problems for Chalco.

The price of aluminum for cash buyers in London was around $2170 on Monday, down more than 20% from the high in May.

Luo said the risk that the company's downstream customers, who also face capital shortages, could prove unable to pay their bills is also increasing. Ensuring the company's financial security is a major task of all Chalco's top managers, he added.

Aluminum Corp. of China, Chalco's parent, said in a statement earlier this month it will "strictly" control project investments and will be "cautious" about acquisitions amid a slump in metal prices.
 

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