Aluminum Corp of China (Chalco), the nation's largest producer of the metal, suffered first-quarter losses that were worse than expected after booking a surprisingly large deficit on asset impairment. Net losses reached 1.89 billion yuan (HK$2.15 billion), compared with a profit of 1.25 billion yuan a year earlier, based on mainland accounting standards. The loss was smaller than its net loss of 2.57 billion yuan in the fourth quarter of last year. Still, the figure disappointed analysts, who had expected Chalco to book a net loss of just 18.27 million yuan for the full year, according to the mean forecast of 19 analysts polled by Thomson Reuters. 'The 665.5 million yuan loss on asset impairment was a surprise,' said BOC International analyst Belle Chan. 'It is quite difficult to estimate items like this.' Chalco made a provision of just 1.33 million yuan for impairment losses on property, plant and equipment last year. First-quarter turnover dropped 24.4 per cent year on year to 13.94 billion yuan, with alumina sales falling 3.8 per cent to 760,000 tonnes and aluminium rising 36.2 per cent to 926,000 tonnes. There were no sales price details. The average Shanghai spot market aluminium price fell 34.7 per cent in the first quarter to 12,333 yuan a tonne from 18,885 yuan a year earlier, and was 2.5 per cent lower than in the fourth quarter. It stood at 13,000 yuan a tonne yesterday. Chief financial officer Chen Jihua last night said management expected the operating environment to improve in the remaining three quarters after a difficult first quarter, when Chalco still had to bear high raw material costs from last year. The company said last month it expected to have 3.92 million tonnes of aluminium smelting capacity and 11.28 million tonnes of alumina refining capacity by the end of the year. Aluminium is smelted from alumina, which is refined from bauxite. Citigroup said in a research report last month that Chalco might leave 25 per cent of its aluminium capacity and 45 per cent of its alumina refining capacity idle this year, as the global economic slump hit demand. The company sold 3.1 million tonnes of aluminium and 4.26 million tonnes of alumina last year. Chalco wrote down its inventory by 916.25 million yuan at the end of last year. Management said last month it might write back part of the loss if aluminium prices rebounded. The Shanghai aluminium spot market price surged 21.8 per cent to 13,980 yuan a tonne between the end of December and the end of March, while the three-month futures contract rose 17.4 per cent to 13,525 yuan. Chalco last night did not make any warning of potential loss or substantial profit drop for this year's second quarter or first half. Mainland-listed firms must issue warnings if they expect earnings to drop more than 50 per cent year on year. The company posted a net profit of 2.41 billion yuan in the first half of last year. Chalco's share price gained 5.31 per cent to HK$5.75 yesterday. The stock has risen 40.93 per cent so far this year as investors ignored historical losses and bet on its profit recovery on the back of a global economic rebound as a result of government stimulus measures.