Aluminum Corporation of China Ltd. (Chalco), the country's largest maker of the lightweight metal, expects its profit last year to rise 80 percent as income from sales of its raw material alumina rose faster than the costs of making aluminum.

Net income may rise to 6.41 billion yuan (US$773 million) from 3.55 billion yuan a year earlier at the Beijing-based company, according to the median estimate of 10 analysts. Forecasts ranged from 5.8 million yuan to 6.9 billion yuan.

Aluminum prices fell 7 percent from March to December last year after the government restricted loans to industries in order to cool investment. At the same time, Chalco's costs to make aluminum rose as electricity prices gained. The company, which supplies more than half of China's alumina, responded by raising the price of the raw material once in March and twice in September.

"Alumina outlook for this year is still good given the tight global supplies,'' said Sean Zheng, who helps manage US$100 million of stocks with Ding Tian Asset Management.

Chalco has sold the raw material at 4,130 yuan a ton since Sept. 30. China, which relies on imports for roughly half of its alumina needs, imported 5.9 million tons of the material last year.

Chalco's Hong Kong-listed shares fell 25 percent in the past 12 months as aluminum prices declined, making it the third-worst performer in the Hang Seng Enterprise Index, which tracks 38 mainland companies listed in Hong Kong.

"Chalco had its worst year for aluminum since its initial public offering in 2001, because of higher raw material and electricity costs,'' said Trina Chen, a Hong Kong-based analyst with Credit Suisse First Boston.

The aluminum business might report an operating loss while alumina might contribute 107 percent to total operating profit, Chen said.

Source:Shenzhen Daily