Press Metal to benefit from tight aluminium supply but may hit by weaker US dollar

KUCHING (September 29): Press Metal Aluminium Holdings Bhd (PMAH) may see stable aluminium prices supported by tight supply and a potential structural deficit as demand continues to outpace supply.

However, analysts at Maybank Investment Bank (Maybank IB) said the company remains exposed to the risk of a weaker US dollar affecting its revenue.

It estimated that every five per cent depreciation of the US dollar against the ringgit could reduce PMAH’s earnings by about 13 per cent.

The research house said aluminium prices are expected to stay supported by limited supply, with global output projected to grow by only around one to 1.5 per cent in FY25.

It added that the aluminium market continues to tighten, with London Metal Exchange (LME) inventories near multi-decade lows as traditional supply sources remain constrained.

“Russian inflows have been disrupted by sanctions, while China, which accounts for 60 per cent of global output, has reached its government-imposed 45 million tonne production ceiling (44.5 million tonnes as of Aug 2025).

“Meanwhile, high energy costs have forced several smelters to close, further reducing capacity.

“Although new projects are underway in India and Indonesia, commissioning progress could be slower than expected, leaving supply growth lagging demand,” it said in a note on Monday.

Maybank IB noted that the industry’s near term demand trends remain mixed as the US market is pressured by high tariffs while Europe remains subdued. In contrast, China is expected to record modest growth supported by stimulus measures.

Over the medium to long term, it said structural demand from clean energy, artificial intelligence and data centres underpins a constructive outlook for aluminium.

“While a softer US dollar could support aluminium demand, PMAH is exposed to USD weakness on the revenue side,” it said.

Moreover, the house expects alumina, the raw material aluminium production, is expected to see a surplus in 2025 as global capacity growth outpaces demand.

For PMAH, this means lower downstream input costs but weaker earnings contribution from its upstream associate, Nanshan Aluminium International Holdings Ltd (NAIHL).

The current aluminium-alumina spread narrowed to 12 per cent from around 15 per cent in the second quarter of 2025.

NAIHL’s capacity is expected to reach four million tonnes by 2026, with its third one million tonne line operational since July 2025, adding about 300,000 tonnes in the second half of the year on a gradual ramp-up. Its fourth line is due in the second quarter of 2026.

-Agency