PETALING JAYA: Rising aluminium prices driven by a persistent global supply deficit are keeping RHB Research bullish on the basic materials sector.
The research house maintained its “overweight” call on the sector while naming Press Metal
Aluminium Holdings Bhd (PMAH) as its top pick due to the aluminium supply crunch, which is expected to persist.
RHB said companies under its coverage delivered results that were largely in line with expectations during the latest reporting season, while the outlook for aluminium remains favourable amid tightening global supply conditions and improving demand prospects.
“We stay ‘overweight’ and remain upbeat on aluminium, owing to elevated prices driven by a structural supply deficit.”
Aluminium prices on the London Metal Exchange have averaged US$3,647 (RM14,823) per tonne in the quarter-to-date, up 14% from the first quarter of financial year 2026, while premiums at the Main Japanese Port averaged US$306 per tonne, supporting prospects for what could be a record-breaking quarter for producers.
The research house noted PMAH remains well-positioned to benefit from the strong pricing environment, given more than 90% of its products are exported.
It added that a stronger US dollar could provide an additional earnings tailwind.
“Based on our estimates, every 2% appreciation in the US dollar could increase earnings by about 5%, assuming no hedging is done,” it said.
Market expectations of a possible US interest rate hike have risen amid inflation and stronger-than-expected economic data, pushing the ringgit lower against the greenback and potentially boosting export earnings for aluminium producers.
