Falling aluminium prices send Chalco into the red

Aluminum Corporation of China (Chalco) posted its worst results since going public in 2001, chalking up a net loss of 8.23 billion yuan (HK$10.18 billion) for last year.

The loss, compared with a net profit of 238 million yuan in 2011, is one of the biggest annual losses for a mainland state-owned firm for last year.

Last year's loss was much steeper than the 4.8 billion yuan average loss estimated by 21 analysts polled by Thomson Reuters. They forecast it would post a net loss of 2.05 billion yuan this year and another loss of 620 million yuan next year.

Metallurgical Corporation of China warned in late January that it expected to post a net loss of 7.2 billion yuan due to hefty provisions on Huludao Nonferrous Metals, one of the mainland's largest zinc smelters, and its investment in an iron-ore mining project in Australia majority-owned by Citic Pacific.

Chalco, the country's largest producer of aluminium, blamed the loss on a 7 per cent fall in the average selling price of the metal, which led to a 6.6 billion yuan reduction in gross profit.

The economic slowdown on the mainland, coupled with Europe's debt-stricken economy, were to blame for the drop in the metal's price, Chalco said. The more favourable economic trend on the mainland and in the United States this year would support consumption of the metal, but oversupply still persisted, it added.