RHB Research identifies Press Metal as potential low carbon aluminium provider in ASEAN

The RHB Research Institute in Malaysia has declared that Press Metal Aluminium Holdings Bhd is one of its biggest alternatives for providing low-carbon aluminium opposing the smelters in the ASEAN vicinity.

The risk-reward factor for the basic raw materials industry would be on a constant rise with the slowly declining inflationary pressure and the prevailing curtailment in global aluminium provision. This will result in augmented demand for hard commodities, RHB claims.

“Press Metal is set to benefit from the structural demand shift towards Asian smelters as the European facilities are being hampered by the energy crisis there,” pointed out RHB Research.

The research house specifically mentioned aluminium’s case that the commodity price on the London Metal Exchange (LME) witnessed a near-term appraisal in the Q4 of 2022, heightening 14% to US$2,447 per tonne or RMB 10,843 per tonne as of Sept 30 from US$2,155 per tonne or RMB 9,549 per tonne. This occurred because of the sudden alteration in market expectations on the monetary policy.

LME’s decision not to ban Russian-produced aluminium has also weighed heavily on the market as it could be infiltrated with sufficient supply, affecting the average selling prices in a bad way.

“The current year-to-date price of US$2,727 (RM12,083) per tonne is still 10% higher than 2021’s US$2,476 (RM10,971) and remains well above our 2022 assumption of US$2,450 (RM10,856) per tonne,” RHB Research specified.

In the foreseeable time, the research house predicts the LME aluminium prices to be constant within the range of US$2,300 per tonne to US$2,500 per tonne.

“This will be underpinned by the low aluminium inventory levels globally, a pick-up in aluminium adoption from the renewable energy and electric vehicle sectors, as well as the potential relaxation of Covid-19 containment measures in China,” the report made clear assumptions.

The operational conditions are getting worse with labour scarcity issues and cost pressures. The report seems sceptical enough for all these simultaneous incidents.