China’s metals industry racked up huge profits in first quarter

CHINA’S metals industry began this year with its biggest profits in at least a decade as soaring prices for aluminium and copper handed the sector a major boost.

Total profits for smelting & pressing of non-ferrous metals across the country more than doubled to reach 142 billion yuan (S$26 billion) in the first quarter, according to National Bureau of Statistics data released on Monday (Apr 27). That’s the highest level for the period in data going back to 2016.

Metals prices rocketed higher at the start of the year, with copper and gold hitting records and aluminium surging to its highest since 2022. The Iran war also fired up prices of sulphuric acid from March, delivering a big and continuing windfall for Chinese copper smelters that sell the industrial chemical as a by-product.

The big jump in metal-making profits reflects a broader reflation underway across the Chinese economy, with earnings growth across all industrial enterprises picking up pace in the first quarter. Intense competition and overcapacity kept profits subdued in most manufacturing sectors over the past four years.

Profitability at China’s aluminium smelters was already elevated before supply turmoil in the Middle East sent prices much higher. Estimated margins for smelting in China grew to an all-time high of 8,500 yuan a tonne in March, according to an index from Bloomberg Intelligence.

The stronger market backdrop has fed a strong reporting season for Chinese metals giants that are among the world’s biggest producers. Aluminum Corp of China’s first-quarter net income was the biggest in at least a decade, while Zijin Mining Group, mostly a miner rather than a smelter, made net income of more than 20 billion yuan for the first time.

SEE ALSO

China tax authorities rattle metal market with invoice crackdown

China’s aluminium output fuelled by Middle East’s stranded cargoes

London metals index at record high on aluminium ‘black hole’ fear

Asia ‘absorbs the hit on every axis’: What volatile copper, aluminium prices mean for the region

More

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

Major copper smelters such as Jiangxi Copper are enjoying a boost from an unprecedented spike in sulphuric acid prices that is more than offsetting persistently low treatment fees. Still, Beijing’s decision to halt exports of the acid may cap gains.

For every tonne of copper production, Chinese smelters can now earn more than 5,000 yuan from sulphuric acid, boosting their willingness to operate, Yang Changhua, chief analyst with researcher Beijing Antaike Information, told a conference on Apr 16. That helped fuel record production of refined copper in China in March. BLOOMBERG