In late March and early April, several major aluminum companies listed in China released their 2012 annual reports or performance forecasts. The results were alarming: most companies reported significant losses, with some even facing catastrophic financial decline. Analyst Luo Min warned that if the current challenges persist, the losses for the aluminum industry could worsen this year.
China Aluminum, a leading player in the domestic aluminum sector, bore the brunt of these losses. As one of the largest producers of alumina, primary aluminum, and aluminum products, the company saw its net loss reach 8.234 billion yuan in 2012—its worst performance since going public in 2007. Its stock price had dropped by over 90% during the period. The company attributed the massive loss to factors such as severe overcapacity, low market prices, declining ore quality, and restrictions on imported bauxite.
Other major players like Zhongfu Industrial, Chang Aluminum, and Dongyang Aluminum also reported sharp declines in profits or outright losses. Zhongfu’s revenue fell by 16% compared to the previous year, while its aluminum product sales dropped by 123.529 million yuan. Chang Aluminum suffered a 6.78% revenue decline and a loss of 72.58 million yuan, and Dongyang Aluminum saw a 7.31% drop in revenue to 441.5017 million yuan.
Although Yun Aluminum and Ming Tai Aluminum have not yet released full annual reports, they have already signaled that weak macroeconomic conditions and rising production costs will likely lead to significant profit reductions this year.
At the Shanghai Copper-Aluminum Summit in March, Documentary Army, Vice President of the China Nonferrous Metals Industry Association, highlighted the unprecedented difficulties faced by the aluminum industry, noting that it has fallen into a widespread loss situation.
Luo Min pointed out that the industry is under multiple pressures: slowing global economic growth in Europe and the U.S., a slowdown in the domestic economy, overcapacity, rising costs, falling prices, and declining demand. He noted that China Aluminum’s heavy losses were partly due to its high electricity costs, which account for more than half of the production expenses in electrolytic aluminum manufacturing. The electricity price hike at the end of 2011 further worsened the situation for an already struggling industry.
Looking ahead, Luo Min said the industry remains highly sensitive to price fluctuations. April is traditionally a peak season for aluminum demand. If prices rebound during this period, it could boost downstream demand and restore market confidence. However, if prices remain weak and demand stays sluggish, the aluminum industry may continue its downward trend in 2013.
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