Chalco says aluminium prices will rise

"We've seen a distinct improvement in our sales revenue and operating results due to recovering market demand and reduced production costs,” Chairman Xiong Weiping said on Monday, without disclosing detailed figures.

Chalco, one of the world's largest aluminium and alumina producers, posted a worse-than-expected net loss of 4.64 billion yuan (US$680 million) in 2009, compared with a net profit of 19.5 million yuan a year earlier.

"We'll still face challenges this year, but expectations of quick growth in the property and transportation sectors, which consume more than 50 per cent of all aluminium products, will propel demand and boost prices for our products,” Xiong said.

Chalco projects global aluminium prices will fluctuate between US$2,000 and US$2,400 per ton for 2010, and between 15,500 yuan and 18,000 yuan per ton in the Chinese market.

Chalco is a world leader in the production of both alumina and aluminium. Aluminium oxide, commonly referred to as alumina, is used in the production of aluminium metal and also used as an abrasive due to its hardness.

Global alumina consumption is expected to hit 78.4 million tons this year, while domestic markets are forecast to gobble up 35 million tons in 2010.

China will import 4.2 million tons of alumina this year, Xiong estimated.

Chalco produced 7.78 million tons of alumina and 3.44 million tons of aluminium in 2009. This year the company hopes to raise production of alumina by 30 per cent and aluminium by 10 per cent.

Xiong said that he is confident the company will improve its performance this year on a recovering economic environment.

"We estimate Chalco will be profitable this year given the still robust growth in the real estate and auto sectors,” said Zhu Lida, a non-ferrous analyst at Northeast Securities in Shanghai.