Aluminium demand helps Chalco swing to Q1 profit

* Q1 net profit 627.25 mln yuan vs forecast 1.3 bln yuan

* Chalco expects aluminium prices to remain high

* Chalco forecasts profitable H1

(Adds details)

HONG KONG, April 20 (Reuters) - Aluminum Corp of China Ltd (601600.SS) (2600.HK), the country's top aluminium maker, swung back to profit in the first quarter but lagged forecasts as higher-than-expected costs partly offset improved demand for the lightweight metal.

The company, also known as Chalco, said it expected aluminium prices to remain high this year as the global economy regains momentum and China's economy grows.

With production, sales volume and profitability of major products gradually picking up, the company expected to record a profit for the first half of 2010, it said in a statement to the Hong Kong stock exchange on Tuesday.

LME-traded aluminium prices CMAL3 have risen more than 7 percent this year to $2,399 per tonne as the global economy picks up and as Russia's UC RUSAL (0486.HK) (RUSAL.PA) plans to launch an aluminium exchange-traded fund (ETF) that could lock up 1 million tonnes or more of the metal.

Analysts caution, however, that production is rising quickly and could saddle the industry with a big surplus this year.

Hong Kong-listed RUSAL, the world's biggest aluminium producer and led by industrial tycoon Oleg Deripaska, last week beat forecasts with its second-half 2009 profit and unveiled plans to lift output. [nLDE63B1TP]

Primary aluminium stocks in China, the world's top consumer and producer of the metal, have risen more than 45 percent from January as production has increased.

Q1 SWINGS TO PROFIT

Chalco, led by Xiong Weiping, a professor of mineral engineering who became chairman in February, posted a January-March net profit of 627.25 million yuan ($91.88 million) versus a year-earlier loss of 1.89 billion yuan, short of an average forecast for a 1.2 billion yuan profit from two analysts.

"Chalco's net profit came in below market expectactions mainly because of high fuel costs, especially coal costs," said Helen Lau, an analyst at UOB-Kay Hian. "I expect the company to continue facing cost pressure as coal prices are unlikely to fall with China's economy growing further."

However, analysts said Chalco was on track to be profitable this year as demand from the domestic real estate and vehicle sectors drives up aluminium prices. The company posted a 4.6 billion yuan net loss in 2009, hit by the general industrial downturn.

Chalco's Hong Kong-listed shares ended up 2 percent before the results and after posting their weakest close in more than 2 weeks on Monday. They are down 2.9 percent this year, while the broader Hang Seng Index .HSI is down 1.1 percent year-to-Tuesday.

RUSAL's Hong Kong-listed shares have jumped by about a quarter since mid-February, but are still trading 9.7 percent below their late-January IPO price.

((Reporting by Alison Leung; Editing by Ian Geoghegan and Chris Lewis))

((alison.leung@thomsonreuters.com; +852 2843 6369; Reuters Messaging: alison.leung.reuters.com@reuters.net))

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