PETALING JAYA: Press Metal
Aluminium Holdings Bhd is expected to record weaker earnings in the fourth quarter of financial year 2024 ending Dec 31, 2024 due to anticipated peak alumina prices.
Affin Hwang Investment Bank Research (Affin Hwang) foresees the results to come in within the RM340mil to RM440mil range, as high alumina prices are expected to average at 27% of aluminium prices as opposed to the historical average of 17%.
Citing Bloomberg, the research house foresees that the global aluminium market may see a deficit as the demand growth rate outpaces output growth.
Aluminium demand is expected to weaken by 2.9%, driven by China’s slower consumption growth as well as Europe’s continuous subdued demand as automotive original equipment manufacturers or OEMs cut production.
On the supply side, China’s aluminium output nears its 45 tonne annual capacity following strong hydro-powered operations, while delays in new plants in Indonesia and India limit global production growth.
This factored into Affin Hwang’s revision of the London Metal Exchange aluminium price assumption upwards to US$2,525 and US$2,575 per tonne for 2025 and 2026, reflecting the demand growth outpacing the expected supply growth.
Meanwhile, alumina prices have dropped to around US$565 per tonne from a high of US$800 per tonne in December 2024, following supply recovery from Brazil, Guinea and China.
The global alumina market is expected to enter a surplus in 2025, with supply growing 4% – outpacing demand growth of 1.3% – driven by increased output from China, Indonesia and India.
The research house noted that Press Metal is partially protected from price spikes through hedging and stronger associate contributions from PT Bintan in Indonesia. Affin Hwang maintained a “buy” call on Press Metal with a higher target price of RM5.70 apiece.
