UOBKH Research said that demand from China would significantly boost global aluminium consumption, driven by government stimulus.
PETALING JAYA: Aluminium producer Press Metal
Holdings Bhd’s growth in 2025 is seen to be driven by the continued recovery in demand from China and lower raw material costs due to increased alumina supply.
UOB Kay Hian (UOBKH) Research said in a report that demand from China, which accounts for over half of the global demand, would significantly boost global aluminium consumption, driven by government stimulus.
It said alumina prices were expected to ease this year from new capacity from China, India, Guinea and Indonesia coming onstream and significantly boosting global supply.
“Additionally, the resumption of Rio Tinto’s Australian refineries in early-2025 is likely to alleviate the current supply tightness,” it noted.
The research house has maintained a “buy” call on Press Metal’s stock with a target price of RM6.30 based on 28 times 2025 forward price-earnings.
It said the surge in demand for value-added aluminium products in the third quarter ended Sept 30, 2024 resulting in value-added product volume growing to half of the company’s total sales has prompted it to augment capacity for such products by 100,000 tonnes.
Currently, value-added product capacity stood at 61% of the company’s total smelting capacity. The most substantial demand surge by product category were from wire rods and billets.
“With the expansion plan in motion, we anticipate value-added product volume to reach at least 60% of the company’s total sales volume by end-2025,” it said.
Press Metal, South East Asia’s largest aluminium producer, would also have a secured supply of alumina in the future from a strategic joint venture the company inked with Indonesian parties in September 2024.
The deal was to set up an RM3.238bil integrated refinery in Sanggau, West Kalimantan with an initial capacity of one to 1.2 million tonnes and with potential for expansion.
The joint venture would see Press Metal acquire an 80% stake for RM1.036bil to be funded internally.
UOBKH Research said the company can leverage up to 1.5 million tonnes or up to 75% of alumina out of the two million tonnes required annually from this refinery through this stake.
