PRESS METAL ALUMINIUM HOLDINGS BHD

ALUMINIUM prices have rebounded to hover above US$2,200 (RM8,786) per tonne after a temporary blip in early December 2017. RHB Research believes the weaknesses are mainly due to seasonal factors, given slower economic activities in China during the winter months.

“As such, we make no changes to our aluminium price assumptions of US$1,925 (RM7,688) per tonne for 2018 and US$2,118 (RM8,459) per tonne for 2019.

“This is as we are also aware that most of the 2018’s – and around one-third of 2019’s – positions have been hedged.”

The research house said it sees potential upside on the aluminium prices, as currently half of the smelters in China are still loss-making from rising energy costs due to higher coal prices.

RHB Research said it expects another record year for Press Metal.

“We are expecting another record year in 2018 for Press Metal.

“Key drivers include Samalaju Port, which was commissioned last year, would help to cut inland logistics and shipping costs,” it said.

The research house added that increased value-added production will also enhance profitability, which is estimated to increase to 50% (from 30%) by end-2018.

RHB Research added that the 20% joint venture with Sunstone Development Co Ltd of China will help reduce carbon costs in 2018.

Potential upside in aluminium prices, with spot contracts at the London Metal Exchange hovering at above the US$2,200 (RM8,786) per tonne mark, will also be a boost to the company, said the research house.