CHINA Hongqiao Group, the world’s biggest aluminum producer, reported a 21 percent jump in first-half net profit despite lower revenues as it avoided a repeat of hefty impairments seen a year earlier.

Hongqiao, which only reports its earnings on a half-yearly basis, said net income rose to 1.8 billion yuan (US$262 million) in the first six months of 2018, versus 1.49 billion yuan a year earlier, when it recorded a 3.36 billion yuan impairment due to the closure of illegal smelting capacity.

Revenues came in at 44.3 billion yuan, down 6 percent from the first half of 2017, according to a statement to the Hong Kong stock exchange.

Three-month Shanghai aluminum prices were on average 4.9 percent higher year on year, Hongqiao said, citing figures from research house Antaike.

However, Hongqiao’s output of aluminum alloy products in the first half fell 20.2 percent year on year to 3.187 million tons after it was forced to close 2.68 million tons of smelting capacity in mid-2017.

Alumina accounted for 10.8 percent of revenues, versus just 2 percent a year earlier.

Sales of the substance used to make aluminum jumped almost fivefold from 970.9 million yuan in the first half of 2017 to 4.77 billion yuan as the company captured rising demand for alumina products, Hongqiao said.

China does not usually export much alumina but this year producers have taken advantage of a favorable arbitrage to international prices and have been selling overseas.

Smelters in northern Chinese cities will be subject to 30 percent production cuts this winter heating season starting in November, according to a draft plan from the Ministry of Ecology and Environment this month. (SD-Agencies)