China’s Xinjiang-based aluminum producer, Tianshan Aluminum [002532:CH], published its earnings forecast for the first half-year of 2021, expecting a net profit attributable to shareholders of RMB1.96bn, jumping 200.15% YoY, as reported by Sina on June 24. According to the company announcement, it attributes the sharp profit growth to the price hike in aluminum, in addition to the stable production at full capacity during the reporting period.
Tianshan Aluminum mainly engages in the production and sales of electrolytic aluminum, high purity aluminum, and alumina. According to the company, in 1H21, the average marketing price for aluminum ingots went up 31% compared to that in the same period of 2020. Aside from aluminum, with the resumption of industries, the prices for commodities such as copper, zinc, and iron all witnessed considerable growth this year, which cut the profit of corresponding downstream manufacturers, especially the small and medium-sized enterprises. In response, The National Food and Strategic Reserves Administration announced on June 22 that it would release 20,000 tons of copper, 30,000 tons of zinc, and 50,000 tons of aluminum in forms of public bidding on July 5 and July 6, which is the first batch of metal reserve releases in 2020 and the first time in a decade. However, given that the first batch of inventory dump only accounts for a minority of the country’s monthly metal output, the price increase in aluminum and other non-ferrous metals could be restrained in the short term, but they will then rally to new highs in 2H21, citing Christopher LaFemina, Jefferies analyst.