Press Metal aims for higher productivity from upstream division

Press Metal Bhd (Press Metal) is aiming for higher contribution from its upstream business in terms of higher production, driven by the completion of its Samalaju smelter plant and the recovery of its Mukah smelter plant.

After facing many headwinds in 2013, mainly due to the state-wide power outage which greatly affected its Mukah smelter plant, Press Metal’s chairman Dato (Dr) Megat Abdul Rahman Megat Ahmad said with both Samalaju and Mukah smelters back in full operations, the group looks forward to more contribution from the upstream business in terms of higher production.

“Global aluminium demand is expected to grow by about seven per cent this year. Although demand in China will moderate, the demand in America is strong. Even the eurozone is expected to recover from its last year’s contraction, with demand expected to increase by about one per cent.

“The emerging countries will also benefit from the more positive sentiment and their demand is also expected to be positive.

“Further, demand for our downstream products should also be better albeit the stiff competition we are facing,” he said in Press Metal’s Annual Report 2013 released yesterday.

Meanwhile, group chief executive officer Dato Koon Poh Keong was positive about Press Metal’s growth in 2014 as well as the aluminium market.

He also expressed optimism about latest developments in the auto industry which would further push the demand of aluminium.

In the report, Koon noted that auto industry analysts has estimated that over the next 10 years, the usage of aluminium in new auto vehicles would increase from about 145 kilogramme (kg) per vehicle to 250kg, an increase of 72 per cent.

“This higher usage of aluminium in auto vehicle production coupled with the large number of mass market vehicle segments have led many aluminium sheet producers to pour in billions of dollars to expand their capacity which in turn will lead to much higher demand for aluminium for the coming years,” Koon commented.

He was also positive on this new development as the motor vehicles per capita in Asia region is still low and the expected increase in consumers incomes will translate into higher demand for motor vehicles thus the increasing demand for aluminium.

“Already in this region, excluding China, the demand has topped six million tonnes but the production capacity in this Southeast Asia region is only about 650 thousand tonnes with Press Metal being the largest producer.

“In fact, substantially all Press Metal primary aluminium products are exported to this region,” he highlighted.

Overall, on prospects for 2014, Koon commented, “Going forward, the management will be focusing on stabilising the production and improving the efficiency in operations.

“This applies to our smelteing operations in Samalaju too as it reaches full production in October last year.”

“Further, the end products to be produced in Mukah will be towards higher value namely billets and alloy 356 which cater to the vehicle aluminium wheel manufacturers. These higher value products allow us to fetch higher premium above the London Metal Exchange (LME) price due to the value-add process.”