Aluminum Recovery Delayed by Stocks, Chinalco Says

By Bloomberg News

July 23 (Bloomberg) -- Aluminum Corp. of China, the nation’s largest producer of the metal, said a price recovery for the lightweight metal will lag behind other base metals because of high inventories.

A demand revival from the auto and building industries hasn’t had “an obvious” impact on aluminum yet, Chairman Xiong Weiping said today in an interview in Beijing while attending a conference.

“The aluminum recovery has not been as rapid as copper because aluminum inventories are still high,” Xiong said. “Demand from the building and auto industries would only have an effect later.”

Aluminum inventories monitored by the London Metal Exchange quadrupled in the past year to a record 4.6 million metric tons, forcing Chinalco and rivals including Aloca Inc. to cut output. Aluminum futures in Shanghai have gained 20 percent this year, lagging behind an 83 percent gain for copper.

Copper futures gained 1.6 percent in Shanghai to 43,670 yuan a metric ton at 11:24 a.m. Aluminum rose 1 percent to 13,965 yuan. Aluminum Corp. of China Ltd., the listed unit of Chinalco, rose 2 percent to HK$8.28 in Hong Kong trading.

Anglo American

Chinalco is “closely watching” how a proposed merger between Xstrata Plc and London-based Anglo American Plc unfolds, Xiong also said. The proposal is a “very important transaction” in the world of resources, he said.

Xiong, who was responding to reporters’ questions, didn’t say whether Chinalco would be interested in bidding for either of the companies.

Anglo American last month rejected a proposed “merger of equals” from Xstrata, which would have created a mining company with sales of more than $54 billion. Anglo American may start talks with Chinalco about investing in Anglo’s Brazilian iron ore business, the Sunday Telegraph reported June 28.

Separately, Xiong also said Chinalco is continuing to push for an agreement to buy power directly from utilities under a government proposal. He didn’t elaborate.

To contact the Bloomberg News staff on this story: Xiao Yu in Beijing on yxiao@bloomberg.net