PETALING JAYA: Press Metal
Aluminium Holdings Bhd has hedged 40% of its supply of raw materials for this year, while raw material costs are expected to ease due to current subdued trends and rising global supply. According to Affin Hwang Investment Bank Research (Affin Hwang Research), Press Metal hedged 40% of its alumina supply this year at 14% to 15% of spot aluminium prices.
Affin Hwang Research noted that the strategy had previously helped Press Metal safeguard its margins during periods of high alumina prices, such as in the second half of 2024 (2H24).
“Press Metal’s upcoming results for the fourth quarter of last year (4Q25) are expected to come in at all-time-high of RM600mil to RM650mil compared with 3Q25, driven by improved aluminium prices and alumina prices remaining subdued,” the research house noted.
Based on a 40:60 hedge-to-spot ratio, analysts also estimate that alumina costs should average about 13% of the aluminium selling price for the year.
“Global alumina oversupply is expected to persist, though prices are unlikely to fall below US$300 per tonne,” the research house said.
“We expect spot prices to remain subdued at current levels as global alumina output growth is expected to outpace demand, driven by projects in China, India, and Indonesia,” it added.
The research house has raised its London Metal Exchange aluminium price assumptions for financial projections for this year and next year to US$3,000 and US$3,200 per tonne, albeit still below current spot prices.
Press Metal’s quarter-on-quarter (q-o-q) improvement is premised on aluminium prices increasing 8% q-o-q and alumina prices falling 11% q-o-q.
“Notably, this trend continued through January, with alumina prices now forming below 10% of aluminium prices (well below the historical average of 17%),” Affin Hwang Research said.
The research house raised its forecast earnings per share for Press Metal by between 7% and 14%, despite the ringgit strengthening.
It has maintained a “buy” call for Press Metal but raised its target price to RM7.90.
