HONG KONG, Aug 23 (Reuters) - Aluminum Corp of China Ltd , the country's top aluminium producer, returned to a loss in the second quarter as a domestic supply glut dragged down prices for the lightweight metal.
China's aluminium market has returned to a state of oversupply as producers restarted idled facilities and new production exceeded demand growth, analysts said.
The company, also known as Chalco, said on Monday that it reversed ya ear-earlier loss to post a first-half net profit on higher sales volume and higher aluminium prices in the early part of this year. It forecast its earnings for the first nine months of 2010 to remain in the black.
Analysts are expected to revise downwards their earnings estimates after the disappointing first half result. The consensus forecast is a profit of 3.15 billion yuan for 2010 from 12 analysts polled by on Thomson Reuters I/E/B/S.
Lacklustre global demand and increased exports from China pushed LME aluminium below $2,000 per tonne at the end of June, from a year high of $2,486 in April. The price stood at $2,051 on Monday.
Strong demand in China for the lightweight metal used in construction, transport and packaging had been the main growth driver of the global aluminium industry from 2003-2009, until the financial downturn dragged prices lower as demand weakened.
China became a net aluminium importer in 2009 as leading producers in the country cut production that helped support a recovery in global prices during the second half of 2009.
Chalco's operating costs remain high, above rivals UC Rusal Ltd, Alcoa Inc and Rio Tinto Plc , making it more vulnerable to softer aluminium prices.
WEAK Q2
Chalco reported a net profit of 530.6 million yuan ($78.14 million) for the first six months of 2010 against a 3.52 billion yuan loss a year earlier, and lagging an average forecast of 683 million yuan from three analysts polled by Reuters.
Stripping out a first-quarter profit of 627.25 million yuan gives a net loss of 96.7 million yuan for the April-June period, versus a restated loss of 1.61 billion yuan a year earlier, based on Chinese accounting standards. Analysts had been expecting the company to break even or post a small profit for the quarter.
Chalco's Hong Kong-traded shares closed down 0.91 percent before the results, while its Shanghai-traded shares were unchanged. Its Hong Kong shares have lost nearly a quarter of their market value this year.
The company was setting up a joint venture to develop iron ore in Africa with Rio Tinto, which would help it diversify beyond the volatile aluminium market, analysts said. But mine construction would take 3-5 years and there would be no apparent profit growth for the listed company in short-term, they added.
(Reporting by Alison Leung; Editing by Chris Lewis)
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