Chalco reports a 4.12 billion yuan net loss in the first half of 2014

China’s top aluminium producer, Aluminium Corp. of China Ltd (Chalco) reported a net loss of 4.12 billion yuan ($670.76 million) on Thursday, for the first half of the year. In the same period last year, the net loss was 623.8 million yuan.

The losses are caused by overcapacity and weak domestic demand. Since the company caters primarily to the domestic market, they had to adjust their production as per the weak demand in the first half according to their filing released to the Shanghai Exchange.

The production of metallurgical alumina was recorded at 6 million tonnes and chemical grade alumina at 910,000 tonnes, in the first half. The former was down by 1.5 % and the latter up 19.7% from last year. The production of primary aluminium also fell 19.7% as compared to 2013 to 1.63 million tonnes.

The aluminium future contract fell by 4% in the first half at Shanghai. The price however has risen since then up by 12 percent from its record low in March 2014.

In the first half, Chalco closed down smelters that that had the capacity of nearly 2 million tonnes of high-cost capacity to cut back the surplus in the country.