Tag Archives: aluminum

China Zhongwang Prices $1 Billion-Plus IPO

Word is that China Zhongwang got $1.3 billion from its initial public offering in Hong Kong. That was less than the $1.6 billion it was looking for, but would still make it the first billion dollar IPO since China South Locomotive & Rolling Stock raised $1.6 billion last August.

The IPO market worldwide has been pretty moribund for all the obvious reasons. China Zhongwang is Asia’s largest maker of extruded aluminum products, which investors see as benefiting from Beijing’s stimulus spending, particularly on new rail lines. Transport-related aluminum products typically have fatter margins than those used in construction. Last year China consumed 39% of the world’s output of extruded aluminum.

The IPO price values the company at just shy of $5 billion, 10 times 2009’s estimated earnings. Trading in the stock is due to start May 8.

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Aluminum, Copper Smelters Facing Same Slump As Steelmakers

Aluminum smelters and copper refiners are facing the same problems as China’s steelmakers. Slowing economic growth in their domestic and export markets is cutting demand for their products, lowering prices and squeezing profits.

The biggest aluminum smelters met commerce and finance ministry officials today to ask for tax breaks and purchases by the state reserve. Bloomberg reports that China’s aluminum prices have fallen 22% this year to less than the operating costs of domestic smelters. The slump in demand  comes on top of a 15% tax imposed on exports of aluminum alloys in August to curb over-investment in the energy-intensive industry.

Meanwhile, Chinalco Luoyang Copper, part of Aluminum Corp. of China, or Chalco, the country’s largest metals processor, said its orders had fallen 20% in the last quarter. Rivals have also cut production. The industry is thought now to be operating at 80% of capacity.

Demand and prices for all three metals may well continue to fall through to next year, which will send a lot of smaller producers out of business.

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