Chalco 2600

Chalco 2600

Postby winston » Thu May 08, 2008 1:14 pm

China's Aluminum Smelters Add 73% More Capacity Than Forecast
By Xiao Yu

May 8 (Bloomberg) -- Aluminum smelters in China, the world's biggest producer of the metal, may add 73 percent more capacity than forecast, according to research company Beijing Antaike Information Development Co.

New capacity under construction may reach 3.8 million metric tons, higher than an earlier estimate of 2.2 million tons, Wang Feihong, Antaike's chief aluminum analyst, said in a phone interview from Beijing today. Most of the new plants will start production in the second half, he said.

The expansion by companies including Aluminum Corp. of China Ltd. and China Power Investment Corp. will increase domestic supplies and may stymie expectations that China will become a net importer of the metal, damping global prices.

``The sudden rebound of investment in the aluminum industry may lead to unexpected supply increases in the second half, and we are not optimistic over the aluminum price,'' Wang said. The expansion is ``much faster than expected,'' he said.

Aluminum for three-month delivery on the London Metal Exchange has gained 21 percent this year after China and South Africa cut production because of power shortages. The metal traded little changed at $2,930 a ton at 11:30 a.m. Beijing time.

Some projects may be delayed because China may face power shortages, Wang said. Antaike is the research affiliate of China Nonferrous Metals Industry Association.

Aluminum Corp.'s Chairman Xiao Yaqing in August said China will become a net importer of the metal because of rising domestic demand.
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Re: Chalco 2600

Postby winston » Tue Jun 03, 2008 8:49 pm

Not vested anymore.

Chalco Falls in Hong Kong After Cutting Alumina Price by 16.7%
By Xiao Yu and Helen Yuan

June 3 (Bloomberg) -- Aluminum Corp. of China Ltd., the country's largest producer of the metal, fell the most since April 14 after cutting alumina prices for the first time since Sept. 13.

Aluminum Corp., known as Chalco, cut alumina prices by 16.7 percent to 3,500 yuan ($505) a metric ton, effective today, according to a table posted on the company's Web site. Alumina is used to make aluminum.

Alumina production in China has outpaced demand growth this year and forced Chalco's smaller rivals such as Shandong Chiping Xinfa Group to cut spot prices. The nation may increase alumina- making capacity by 7.8 million tons this year, after adding 8.7 million tons a year ago, according to CRU International Ltd.

``Chalco's price cut was a delayed one because its rivals had cut prices to that level,'' said Sabrina Xie, Shenzhen-based analyst at Guotai Junan Securities Co. by phone. ``Due to higher bauxite mining costs, there is little room for further price cut of alumina for the rest of the year.''

Chalco fell 62 Hong Kong cents, or 4.5 percent, to HK$13.26 at 3:31 p.m. local time, reversing an earlier gain of as much as 0.6 percent.

Chalco raised alumina prices by 10.5 percent on Dec. 18 and 8.5 percent on Nov. 27. It cut prices by 10 percent on Sept. 13.
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Re: Chalco 2600

Postby winston » Tue Jun 10, 2008 10:03 pm

Chalco Reduced to `Neutral' at China International (Update2)
By Xiao Yu

June 10 (Bloomberg) -- Aluminum Corp. of China Ltd. shares were downgraded to ``neutral'' at China International Capital Corp. after the world's second-biggest producer of alumina had higher- than-anticipated production costs.

Aluminum Corp. was cut from ``buy,'' China International's analysts led by Chris Ding wrote today in a research report. Alumina is used to make aluminum. The country's biggest investment bank also cut the company's target price to HK$9.99.

Alumina output costs rose 23.3 percent in the first four months, compared with last year, after coal and bauxite prices soared, the Beijing-based company, known as Chalco, told analysts last week. Chalco buys the majority of its coal on the spot market.

``The gross profit margin of aluminum smelters will further decline in 2008,'' Ding wrote in the report. ``A domestic supply surplus will make it hard for smelters to pass on higher energy and raw material costs to their customers.''

Chalco's yuan-denominated shares fell by the 10 percent daily limit to 16.46 yuan in Shanghai, while the CSI 300 Index, which tracks stocks in Shanghai and Shenzhen, fell 8.1 percent. Chalco's Hong Kong shares slumped 6.7 percent to HK$12.10, the biggest drop since March 20.

The bank also cut estimates for Chalco's earnings per share by 23 percent to 0.62 yuan in 2008 and by 25 percent to 0.69 yuan in 2009. Chalco reported earnings per share of 0.82 yuan in 2007.

Coal, Bauxite

Coal contributed 11 percent to the increase in production costs and bauxite about 8 percent, China International estimated. The end of favorable electricity rates also caused costs to rise.

Chinese spot coal prices surged 30 percent and imported bauxite prices gained almost 50 percent in the first four months compared with a year earlier, the report said.

Chalco produced 3.45 million metric tons of alumina in the first four months, selling them at 3,364 yuan ($486) a ton, Chalco told analysts. The company produced 950,000 tons of aluminum, selling the metal at 19,148 yuan a ton in the same period.

The company aims to boost output of alumina by 6.5 percent to 10.2 million tons and production of aluminum by 28.6 percent to 3.6 million tons this year, Chalco told analysts.

Aluminum for three-month delivery on the London Metal Exchange has gained 22 percent this year. The metal traded 0.8 percent lower at $2,929 at 2:33 p.m. Beijing time.
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Re: Chalco 2600

Postby winston » Thu Jun 19, 2008 1:37 pm

Chalco lost 0.46 hkd or 4.09 pct at 10.80 after Merrill Lynch (nyse: MER - news - people ) cut its target price on the stock to 15.20 hkd from 19.0, citing lowered earnings forecasts due to weaker-than-expected alumina prices in China.

Merrill cut its earnings-per share (EPS) estimate for Chalco for this year to 0.86 yuan from 1.28.

It also cut the 2009 and 2010 EPS forecasts to 0.92 yuan and 0.95 yuan respectively. It did not provide its previous forecasts for the two years.

Merrill noted potential excess capacity in the industry and rising costs in the near term.
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Re: Chalco 2600

Postby winston » Sat Jun 21, 2008 10:13 am

Not vested.

China's Chalco warns snowstorms walloped H1 profit

Fri Jun 20, 2008 4:47am EDT

HONG KONG, June 20 (Reuters) - Aluminum Corp of China (2600.HK: Quote, Profile, Research, Stock Buzz) warned on Friday that its first-half net profit will slide by at least 50 percent, succumbing to mounting production costs and falling prices for its main product, alumina.

The firm known as Chalco blamed power supply and production disruptions because of crippling snowstorms in January, as well as the rise of fuel and raw material costs, for the slippage. Analysts say supply of alumina -- used in the production of aluminium -- was swelling nationwide and dampening prices.

The forecast was made under Chinese accounting standards.
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Re: Chalco 2600

Postby winston » Mon Jul 07, 2008 3:01 pm

Looking for the right time to buy some puts on Chalco..

======================

July 7 (Bloomberg) -- Aluminum Corp. of China Ltd., the nation's biggest producer of the metal, halted production at an aluminum venture in the northern province of Shanxi because of a power shortage.

The provincial government ordered smelters to cut capacity to ensure power supply for farming, Wang Suomin, a manager at the Shanxi Huaze Aluminum & Power Co. venture, said by phone today. The venture has an annual capacity of 280,000 metric tons.

Power shortages globally are crimping metal production and boosting prices. China's worst snowstorms in five decades closed power stations and smelters in January and February, pushing up aluminum prices 31 percent this year. A power shortage is hitting the southern part of Shanxi and forcing the company to suspend production, Wang said. He didn't given a loss estimate.

There is a power shortage in the Shanxi province, said Zhang Qing, a spokeswoman with Beijing-based Aluminum Corp, better known as Chalco. Zhang said she couldn't comment on what's happening with production.
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Re: Chalco 2600

Postby winston » Tue Jul 08, 2008 1:12 pm

Have not bought the puts yet.. From UOB-Kay Hian:-

=============================

Snippet – Chalco

Mixed impact from power limitation
It was reported that the provincial government of Shanxi had ordered aluminium smelters to cut capacity to ensure power supply for farming last week.

Chalco has two smelting plants in Shanxi Province (Shanxi Huaze 0.28m-tonne capacity and Shanxi Huasheng 0.22m-tonne capacity) with a combined capacity of 0.5m tonnes. According to Chalco’s management, only 5% of its Shanxi smelting operation is currently affected by the power limitation. However, power shortage could become worse and prolonged in the coming months.

Assuming a 25% cut in capacity for two months due to power shortage, Chalco’s aluminium output could be reduced by about 20,000 tonnes this year, or 0.6% of its total output.

However, aluminium price in the domestic market has soared due to the potential cut in aluminium output. The 3-month futures for aluminium in the Shanghai Futures Exchange increased by 2.4% from Rmb19,300/tonne to over Rmb19,760/tonne within a day. Additional earnings from rising
aluminium price should offset the negative impact of power limitation for Chalco.

At 13.7x FY09 PE, we see this as a fair valuation for the stock. Maintain HOLD with an entry price of HK$8.50.
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Re: Chalco 2600

Postby winston » Fri Jul 11, 2008 10:39 am

STOCK ALERT - Chalco surges in HK as Aluminum price spikes on output cut news

HONG KONG (XFN-ASIA) - Aluminum Corp of China Ltd (Chalco) shares were sharply higher in early trade after alumimum prices hit a record high in London yesterday after China top 20 aluminum smelters decided to cut their output by up to 10 pct from this month.

At 10:08 am, the stock was up 0.44 hkd or 4.99 pct at 9.26, while the Hang Seng index was down 29.70 points or 0.14 pct at 21,791.76.

Twenty largest aluminum smelters in China, including Chalco, have agreed to cut their output between 5 to 10 pct from this month in a bid to reduce power consumption and push up prices, an industry official said yesterday.

The 20 smelters accounts for around 70 pct of the country's total aluminium production.

Following the news, Aluminum price hit an all-time high on the London Metals Exchange.
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Re: Chalco 2600

Postby winston » Fri Jul 11, 2008 3:49 pm

Have not bought the puts. May not be a good idea to buy now. Wait & see..

===========================

BROKER CALL Chalco H-shrs kept 'overweight'; output cuts beneficial - JP Morgan

HONG KONG (XFN-ASIA) - JP Morgan maintained an "overweight" call on Aluminum Corp of China Ltd's (Chalco's) Hong Kong-listed shares, saying the company will benefit from aluminum output cuts by it and other domestic peers.

China's top 20 aluminum smelters have agreed to cut production by up to 10 pct from this month.

JP Morgan noted that the production cut was due to power shortages and weak domestic aluminum prices, with alumimum prices in China currently trading at a 28 pct discount to international prices.

It noted that "annual production loss of one mln tons is equivalent to the total London Metals Exchange
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Re: Chalco 2600

Postby winston » Mon Jul 21, 2008 3:57 pm

Good candidate to buy a put later..

==============================

UPDATE 1-Goldman cuts Chalco to neutral on cost pressures
Mon Jul 21, 2008 1:56am EDT

HONG KONG, July 21 (Reuters) - Goldman Sachs cut its rating on Aluminium Corp of China (Chaloc) (2600.HK: Quote, Profile, Research, Stock Buzz), the country's largest producer of the metal, to neutral from buy on Monday on expectations of another power tariff hike by Beijing.

China raised on-grid power tariffs by an average of 4.5 percent this month, piling pressure on electricity-hungry aluminium smelters such as Chalco (601600.SS: Quote, Profile, Research, Stock Buzz).

The brokerage house also cut its target price on Chalco to HK$11 from HK$17. Shares in the company, which have slid 46 percent so far this year, were up 1.3 percent on Monday at HK$8.73, lagging a 3 percent gain on the benchmark index .HSI.

Power shortages in China are also affecting Chalco's production and a looming crisis threatens smelters' planned capacity expansion this year.

Chalco confirmed two joint ventures in Shanxi province had shut some capacity.

It said in a statement its 60-percent owned Shanxi Huaze Aluminium and 51-percent owned Shanxi Hua Sheng Aluminium had closed some production pots since June 26.

As of July 18, Huaze's closed pots would reduce the smelter's monthly output by 25 percent, Chalco said in the statement posted on its website (www.chalco.com.cn). It has capacity of 280,000 tonnes of primary aluminium production a year.

Hua Sheng's closed pots would cut the smelter's monthly output by 22 percent. It has capacity of 220,000 tonnes a year.

Chalco did not say when the plants would resume full production but expected the two smelters would lose output by a total of 30,000 tonnes.

In early June, aluminium smelters said they had expected power fees to rise in the second half, which has supported global aluminium prices.

Chalco, which issued a profit warning for the first half of the year in June, also joined China's top aluminium smelters in cutting production by 5-10 percent with an aim to push up prices of the commodity.

The stock has come under severe selling pressure in recent weeks, with mounting input costs and falling prices of its main product alumina, seen eroding the company's bottomline.
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