China’s major nonferrous companies experienced a profitability surge in the first half of 2018, with analysts forecasting the industry’s prospects are likely to remain promising throughout the year.

The strong half-year performance was mainly driven by ongoing supply-side reforms boosting product prices and deepening State-owned enterprise reforms, revitalizing SOEs, many of which lead the industry, analysts said.

“The country’s supply-side reforms in the industry have had a substantial effect on the supply side. The reforms will continue to rebalance supply and demand to help the industry to develop,” said Zhou Lisha, a researcher at the State-owned Assets Supervision and Administration Commission’s research center.

In the past five years, the nonferrous industry has eliminated 2.4 million metric tons of outdated production capacity and 5.66 million tons of inefficient capacity, according to Zhou.

The supply-side reforms are closely integrated with the SOEs’ deepening reforms, such as technological transformation and corporate restructuring, which are contributing to the industry’s overall performance, she said.

A report by TF Securities said cutting outdated capacity in the steel sector has led to high demand for minor metals, such as molybdenum, manganese and vanadium, that are often used in high-end steel production.

Aluminum Corp of China Ltd recorded operating income of 82.06 billion yuan ($12 billion) and net profit of 1.36 billion yuan, according to its semiannual report.

As of June 30, the SOE’s debt-to-asset ratio was 66.72 percent, with a decrease of 0.55 percentage point from the end of 2017. Its net cash inflow reached 6.74 billion yuan, a record high in the past five years and an increase of 1.38 billion yuan year-on-year.

Other major listed nonferrous companies, mostly State-owned or with mixed public-private ownership, also reported high profit increases in the first half of 2018.

However, an official with the China Nonferrous Metals Industry Association, who asked to remain anonymous, said despite most major listed companies in the industry operating well and reporting increased profits, not every business is faring well.