Bloomberg quoted BOCOM International Holdings Company as saying that Aluminum Corporation of China Limited’s cut of alumina prices may reduce its profit by about CNY 300 million per year.
The nation’s biggest producer of aluminum also known as Chalco set its alumina price at CNY 2,800 per tonne. That’s the first adjustment since March when the company raised prices to CNY 3,000 and the first price cut since July last year.
Mr Luo Rongjin analyst of BOCOM said that “The price cut would squeeze profits as the company’s margin is already thin. The cut was made on November 28th 2011.
Mr Luo said that alumina, a white powder used to make aluminum accounted for more than 70% of Chalco’s profit last year as the smelter struggled to break even in the metal unit. Aluminum prices in London have slumped 25% from a record in May to USD 2,088 per tonne amid concerns that the European sovereign debt crisis and a slowdown in the US economy may curb demand for commodities.
BOCOM’s Mr Luo cut his estimate for Chalco earnings this calendar year to about CNY 0.07 per share from CNY 0.08 following the alumina price cut. Earnings per share may be CNY 0.091. The company posted earnings of CNY 778 million or CNY 0.06 per share for 2010.
(Sourced from Bloomberg)
