In late March and early April, several major aluminum companies in China released their 2012 annual reports or profit forecasts. The results were largely disappointing, with many companies reporting significant losses. Analyst Luo Min noted that if the current challenges in the aluminum industry persist, the financial losses for the year could worsen further.
China Aluminum, one of the leading firms in the domestic aluminum sector, suffered the most severe losses. As a key player involved in mining, smelting, processing, sales, and R&D, it is the largest producer of alumina, primary aluminum, and aluminum products in the country. However, its annual report, published on March 28, revealed a net loss of 8.234 billion yuan—its worst performance since listing on the A-shares in 2007. The company’s stock price had dropped by over 90% during this period.
The company attributed these losses to multiple factors, including severe overcapacity, low market prices, declining ore quality, and restrictions on the import of bauxite from abroad. Other major players such as Zhongfu Industrial, Chang Aluminum, and Dongyang Aluminum also reported substantial declines in profits or outright losses. For instance, Zhongfu Industrial saw a 16% drop in revenue compared to the previous year, while Chang Aluminum reported a loss of 72.58 million yuan. Dongyang Aluminum’s revenue fell by 7.31% year-on-year.
Although Yun Aluminum and Ming Tai Aluminum have not yet released full annual reports, they have warned that weak macroeconomic conditions and rising production costs will likely lead to a sharp decline in profits this year.
At the Shanghai Copper-Aluminum Summit in March, Wang Dang, Vice President of the China Nonferrous Metals Industry Association, highlighted that the aluminum industry is facing unprecedented difficulties, with many companies operating at a loss.
Luo Min pointed out that the industry is under immense pressure due to external factors such as economic slowdowns in Europe and the U.S., domestic economic deceleration, overcapacity, rising costs, falling prices, and reduced demand. He added that high electricity costs are a major issue for companies like Chinalco, as electrolytic aluminum production consumes a large portion of energy. The electricity price hike at the end of 2011 further worsened the situation for an already struggling industry.
Looking ahead, Luo Min acknowledged that the entire aluminum industry chain is closely watching price fluctuations. April is traditionally a peak season for aluminum demand, and a price rebound could help stimulate downstream demand and restore market confidence. However, if prices remain weak and demand does not improve, the industry may continue to face a downturn throughout 2012.
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