Nonferrous metals post declines in first half

By Li Qiaoyi

The country's three nonferrous metals giants, Chinalco, Jiangxi Copper, and Western Mining, all reported big declines in the first half of the year, according to their filings with the Shanghai Exchange Stock released yesterday.

Chinalco posted a net loss of 3.52 billion yuan ($515.30 million) in the first six months, down 247.11 percent from a year earlier. Jiangxi Copper and Western Mining reported net profit of 1.20 billion yuan ($175.95 million) and 45.62 million yuan ($6.68 million) respectively from January to June, a drop of 60.99 percent and 93.67 percent respectively on the previous year.

Though the fiscal reports in the first half of the year posted big declines from the previous year, their earnings in the second quarter generally improved over the first quarter, said Heng Kun, an industry analyst from the Essence Securities.

The nonferrous metals industry as a whole is expected to continue its recovery during the second half of the year, Heng forecasted. But he noted that each nonferrous metal sector has its own unique set of economic circumstances.

Fan Haibo from Cinda Securities agreed, saying that the copper industry is likely to enjoy a strong recovery, given the tight supply and demand relationship of copper products.

Copper prices have gradually bounced back over the first half of the year thanks to other countries' stimulus packages, which have helped boost market confidence, the dollar's gradual weakening, and higher inflationary expectations.

The short supply of copper materials has also helped the price rebound, said Jiangxi Copper in its filing.

However, the situation is different for the aluminum industry.

The global financial crisis' effect on the real economy, and the shrinking of the market for aluminum products combine to pose unprecedented challenges to the company's business, Chinalco said in its filing.

Both Heng and Fan forecasted that the aluminum industry needs more time to recover. They believe that overcapacity of aluminum products has hampered the growth of the industry. Heng forecasted that Chinalco, China's aluminum giant, isn't expected to make a profit this year.
 

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