Press Metal earnings face pressure as aluminium prices fall and carbon anode costs rise

Press Metal Aluminium Holdings Bhd is facing pressure on its earnings as aluminium prices fall below US$3,000 per tonne and carbon anode prices reach a three-year high. The increase in raw material costs, combined with weaker aluminium prices, has led RHB Research to lower its earnings forecasts for FY26 to FY28, although the firm has retained its “Buy” recommendation on the company.

RHB Research linked Press Metal’s nine percent single-day share price decline to lower aluminium prices, higher carbon anode costs, concerns over rising US inflation, tighter monetary policy and a stronger US dollar.

Aluminium prices fell to US$2,987 per tonne as market sentiment weakened following a sell-off in artificial intelligence-related stocks. Expectations of a faster-than-anticipated recovery in the Middle East and the possibility of additional supply from Indonesia also weighed on prices.

Meanwhile, carbon anode prices increased six percent in two weeks to exceed CNY6,000 per tonne, partly due to higher petroleum coke costs. The rise adds to production expenses at a time when lower aluminium prices are affecting the company’s earnings outlook.

Higher carbon anode prices affect earnings forecasts

Carbon anodes account for an estimated 16 to 19% of Press Metal’s cost structure. According to RHB Research, every CNY100 per tonne change in carbon anode prices could affect annual net profit by two to three percent.

In response to higher carbon anode costs and revised foreign exchange assumptions, the research firm cut its earnings forecasts for FY26 to FY28 by four to five percent.

Despite the lower forecasts, RHB Research maintained its “Buy” recommendation but reduced its target price to RM9.30 from RM9.80. The revised target price implies potential upside of about 43 percent.

The firm said Press Metal’s shares appeared oversold, trading at 18.9 times forecast FY27 earnings and approaching their three-year valuation low. However, it warned that the share price could decline further if aluminium prices continued to fall.

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Indonesian expansion could support future margins

Press Metal’s planned expansion in Indonesia could help improve its cost position over the longer term. The company’s 80% -owned PT Kalimantan Aluminium Industry project is expected to begin operations in the second quarter of 2027.

The facility is expected to reach full capacity within two to three months of commissioning, while Phase Two is targeted to begin toward the end of FY27.

The expansion could bring Press Metal close to full self-sufficiency in alumina, a key raw material used in aluminum production. This could help improve the company’s smelting margins by reducing its reliance on external alumina supplies.

RHB Research maintained its positive outlook on Press Metal, supported by expectations of a near-term aluminium supply deficit. However, a sharp decline in aluminium prices and persistently high raw material costs remain the main risks to the company’s earnings.

While lower metal prices and higher production costs are affecting the near-term outlook, the planned Indonesian expansion could provide support for Press Metal’s margins as the new facility comes online.

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