Aluminium Corporation of China (Chalco), the nation’s second largest producer of the lightweight industrial metal, posted an 11-fold jump in interim profit, thanks to surging product prices on the back of Beijing’s tough measures to rid excess capacity.

The Beijing-based company, which mines bauxite, refines it into alumina which is then smelted into aluminium, recorded a net profit of 751.3 million yuan for the year’s first six months, up from 67.9 million yuan in the same period last year and 1.54 million yuan in the year preceding that.

It is the best interim results achieved by the state-backed company in nine years, which had three consecutive interim losses between 2012 and 2014 when the entire industry suffered from major overcapacity despite strong demand growth.

“In the year’s second half ... China’s clean up of production lines that have flouted regulations will have an important impact on the market,” the company said in a filing on Thursday to Shanghai’s bourse where it is listed besides Hong Kong.

“China’s aluminium demand will continue to grow steadily, helped by new consumption segments.”

The interim profit amounted to 30.3 per cent of the 2.48 billion yuan average full-year estimate of 11 analysts polled by Bloomberg, suggesting that analysts expect it to reap even more benefits from the metal’s price rally.

First-half revenue rose 83 per cent year-on-year to 91.3 billion yuan, on the back of higher product selling prices.

The average price of three-month aluminium futures traded in Shanghai gained 20.3 per cent year-on-year in the year’s first half to 13,809 yuan a tonne, Chalco said.

In London, aluminium futures fell from almost US$2,300 a tonne in early 2012 to a low of around US$1,450 in the third quarter of 2015, before steadily climbing back to just above US$2,000 in recent days.

The price decline in earlier years was caused by rampant and heavily debt-funded capacity expansion by Chinese smelters, some of which were done without proper approval by industry and environment regulators.

Aluminium smelting is a highly energy-intensive industry, and a major contributor to serious pollution problems in China which relied predominantly on burning coal to generate the electricity to power the smelting plants.

China accounted for 55 per cent the world’s aluminium output last year.

Four central government ministries in April this year issued a joint edict ordering the closure of smelting plants that flouted industry and environment regulations, sending aluminium prices higher on expectation of tighter supply.

The measures saw the Chinese smelting industry’s capacity utilisation climb to 85 per cent on June 30, from 76 per cent a year ago, Chalco said.

According to a TF Securities report, some three to four million tonnes of annual capacity are estimated to be shuttered under the policy, out of around 43 million tonnes of total capacity in China.

An additional 1.14 million tonnes of capacity could be curtailed in the coming winter, as Beijing ordered aluminium smelters to cut output by up to 30 per cent to contribute to efforts to tackle chronic air pollution in northern China, it said.

Smelters whose production lines are powered by their own power plants has also been asked to pay up on various government levies charged to power distributors and users, but were ignored by the smelters.

TF’s analysts said the policy would hit smelters in the Xinjiang autonomous region and Shandong province the hardest, where the majority of smelters source electricity from their own power plants.

Most of Chalco’s smelting capacity is in Henan, Guizhou, Qinghai, Gansu provinces and Inner Mongolia autonomous region.

Chalco shares on Thursday closed 2 per cent higher at HK$5.50. They have gained 71.9 per cent year to date, outperforming the Hang Seng Index’s 24.3 per cent rise.