Chalco posts Q3 loss, says outlook brighter

* Q3 net loss 117.81 mln yuan vs 21.3 mln profit a year ago

* Says full year will be profitable

* Stock has risen more than 30 pct since July

(Adds details, background)

By Alison Leung

HONG KONG, Oct 25 (Reuters) - Aluminum Corp of China Ltd (2600.HK), the world's top  aluminium maker by market value, swung to a worse-than-expected third-quarter loss on a supply glut and weak margins.

But it said on Monday its outlook was brightening and it would make a profit for the whole of 2010.

Declining aluminium inventory globally and lower production in Chinese provinces including Guangxi, Guizhou and Henan due to locally mandated energy-saving orders should help support aluminium prices in coming months, analysts said.

The company, also known as Chalco (601600.SS), expected aluminium prices to rise as the global economy continued to recover and China's economic growth was stable.

"The group has started to see the impact of cost cutting and the sales volume and prices of its main products have gradually improved," it said in a filing to the Shanghai stock exchange.

Alcoa Inc (AA.N), the largest U.S. aluminium maker, increased its outlook for global demand after it reported forecast-beating quarterly profit this month. [ID:N07171017]

Investors have begun shifting their focus on Chalco to its new strategy of diversifing into the production of other metals and materials like coal, iron ore and copper.

In July, Chalco agreed to invest $1.35 billion to develop a Guinea joint venture that partner Rio Tinto (RIO.AX) says is the world's largest undeveloped iron ore deposit. [ID:nTOE66S071

Shares of Chalco ended up 0.4 percent, in line with the broader market. They have risen more than 30 percent since July despite analysts' comments that it would take a few years for the new businesses to bear fruit.

"The fact that it does diversify their earnings away from aluminium... that's probably been taken as positive (by the market)," Daniel Kang, an analyst at HSBC, said before the results were announced.

Chalco made a net loss of 117.81 million yuan ($17.69 million) in July-September as production costs increased on higher alumina and electricity prices.

The net compared with 21.3 million yuan profit in the same quarter last year and lagged two analysts' forecasts of break-even and a 111 million yuan loss.

For the first nine months, it made a net profit of 412.79 million against a loss of 3.50 billion yuan the same period a year ago. ($1=6.658 Yuan) (Reporting by Alison Leung; Editing by Michael Shields)

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