Press Metal Bhd improves its outlook based on rising aluminium prices

<p>As China squeezes 10% of its aluminium production and as a result, the LME aluminium prices have jumped to a three-year high, Press Metal Aluminium Holdings Bhd (PMETAL) is poised to leverage on &nbsp;the benefits. Analysts have conservatively increased the company&rsquo;s estimated financial year 2018 (FY18E) aluminium price to US$1,900 (RM8,151) per tonne. This will lift the estimated earning in FY18 up to 7% from 0% in FY17.</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/press%20metal%201.JPG" alt="" width="400" height="300" />Recently, Bloomberg reported that China &ldquo;called for the closure of 3.21 million tonnes of illegal aluminium capacity by end-July&rdquo; in Shandong on July 24, higher than analysts&rsquo; expectations. Shandong is a major aluminium production hub in China, and the target makes up 10% of China&rsquo;s total production of 31.6 million tonnes in 2016. The news resulted in a price hike of +7% to US$2,024 per tonne on August 10, the first time prices have traded over the US$2,000 per tonne mark since end-2014.</p> <p><a href="http://www.alcircle.com/primary_aluminium/newscircle/general/detail/28445/the-wait-is-over-alcircle-exclusive-report-on-potline-failure-now-available-for-purchase" target="_blank"><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/buynow.gif" alt="news" width="480" height="84" /></a></p> <p>Press Metal prices similarly rallied with the increase of LME prices, jumping 22% to RM3.27 over the same period. Kenanga Research remains highly positive on PMETAL&rsquo;s short-term price prospects. The long term earnings outlook for the company is supported by continued cost efficiencies and a higher proportion of high-margin downstream products. &nbsp;</p>