Aluminum Corp of China shares rise on strong Q1 profit forecast

Shares of Aluminum Corporation of China Limited (Chalco), the state-owned aluminum giant, surged on the Hong Kong and Shanghai stock exchanges on Tuesday, April 9, following the company's announcement of a robust forecast for its first-quarter 2024 profit. The company expects its net profit attributable to shareholders to increase by between 50% and 60% year-on-year for the January-March period, signaling a significant recovery in its core operations. This positive guidance is primarily attributed to improved market conditions, including higher aluminum prices and effective cost control measures implemented by the company. The projected profit surge marks a notable turnaround for Chalco, which operates as China's largest producer of alumina and primary aluminum. The company cited a year-on-year increase in the average selling price of its primary aluminum products as a key driver, reflecting stronger demand in both domestic and international markets. Furthermore, Chalco's ongoing efforts to optimize its production structure and enhance operational efficiency have contributed to reduced overall costs, thereby expanding profit margins. This performance is closely watched as an indicator of health within China's foundational industrial and manufacturing sectors. The announcement has bolstered investor confidence in the materials sector, particularly for state-owned enterprises undergoing strategic upgrades. Analysts suggest that Chalco's strong quarterly forecast may point to stabilizing demand in downstream industries such as automotive, construction, and packaging, which are major consumers of aluminum. The positive market reaction also underscores the broader narrative of China's industrial policy support and supply-side reforms aimed at creating more sustainable and profitable heavy industries. Chalco's performance will be a critical data point in assessing the momentum of China's economic recovery in 2024.