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By Tom Daly
BEIJING - Chalco, China's biggest state-run aluminium producer, churned out 9% less metal in 2019 as it shut two uncompetitive smelters and barely eked out a profit in the fourth quarter, while it played down the impact of the coronavirus on the industry.
Chalco, or Aluminum Corp of China Ltd, produced 3.79 million tonnes, according to its presentation to analysts reviewed by Reuters - just managing to retain its spot as the world's No.2 listed aluminium producer ahead of rival Rusal's 3.76 million tonnes.
Top producer China Hongqiao last week reported an 11.3% drop in annual output to 5.64 million tonnes.
The lower production numbers come as Chinese aluminium firms brace for a difficult 2020 with prices crashing to more than four-year lows of 11,340 yuan ($1,602) a tonne this week amid ample supply, coronavirus-hit demand and a broad selloff by commodities investors. [MET/L]
Analysts say prices are below most smelters' break-even and have prompted some to shut units for maintenance.
Chalco, which said in a filing on Thursday that it shuttered two "non-competitive" smelting subsidiaries in 2019, made no mention of taking similar measures due to the virus crisis.
The coronavirus, which originated in China late last year, has infected more than 81,000 people in the mainland and killed over 3,000. Globally, the number of cases has crossed the half million mark, while more than 24,000 have died.
The epidemic has ground daily life and businesses to a halt with governments worldwide locking down borders and slapping strict travel curbs to contain the spread.
VIRUS IMPACT NOT SUBSTANTIAL
The overall pattern of the aluminium industry has, however, not changed substantially due to the epidemic, although some orders from downstream processors and construction of new projects have been affected, Chalco said.
The aluminium producer also noted that primary aluminium capacity in industrial heartland Henan and "other regions with high costs may exit" the market, as places like Yunnan and Sichuan become more preferable locations.
Chalco's external aluminium sales fell 11.9% last year, while output of raw material alumina rose 2.1% to 13.8 million tonnes, according to the presentation.
The new 2 million tonnes per year alumina refinery in Guangxi is "advancing as scheduled" and is expected to be completed in June, Chalco adds in the presentation.
The company did not immediately confirm the contents of the presentation.
Chalco was less profitable than Rusal and Hongqiao in 2019.
The latter two saw annual profits of $960 million and about $863 million, respectively, while Chalco's net income rose 2.4% to 851 million yuan ($121 million) on higher trading volumes while it barely scraped a profit in the final quarter.
Excluding a loss in the year-earlier period, the fourth-quarter net income of 42.6 million yuan was Chalco's lowest since the first quarter of 2016, Refinitiv Eikon data shows.
($1 = 7.0633 Chinese yuan)
(Reporting by Tom Daly; Editing by Elaine Hardcastle and Himani Sarkar)