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Chalco shares to surge on strong aluminium
- China Aluminium Network
- Post Time: 2009/6/22
- Click Amount: 471
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Mining Journal quoted Shenyin & Wanguo said shares of Aluminum Corp of China Ltd, the country’s largest producer may jump by more than 40% as the metal rallies to match gains in other commodities.
Analyst Ms Peggy Ye wrote in an e-mailed report that Chalco as the Beijing-based company is known, may surge to HKD 11.5 a share or 2.5 times its price-to-book ratio. That’s 45% higher than yesterday’s closing price of HKD 7.93 in Hong Kong.
Shenyin & Wanguo said Aluminum, used in buildings and car parts, is the worst performer on the London Metal Exchange this year, missing out on a rally that has seen copper surge 62% on optimism the worst of the global recession is over. Copper is about 3.2 times the price of aluminum, compared with a historical average of 1.8 times.
Ms Ye said “Aluminum price may rally in the short term as money flows into this relatively cheap metal. By comparison, other metals and their equities have become very expensive.”
Lead has gained 66% and zinc 28% this year on the London Metal Exchange. Shenyin & Wanguo was voted the country’s best brokerage for research last year by the national pension fund.
Ms Ye said the price of aluminum has increased 13% this month in London. The gain was more an interplay of liquidity and valuation rather than a fundamental shift in demand and supply. She said that Shenyin & Wanguo remains cautious about aluminum demand fundamentals
Ms Ye wrote in the report that “Chinese aluminum producers would like to restart their spare capacity when the Chinese aluminum price is above CNYY 13,000 per tonne. Another round of overcapacity would weigh on aluminum one or two months later.” Source: Mining Journal
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