KUALA LUMPUR (March 6): Press Metal Aluminium Holdings Bhd's shares rebounded today after it said it would largely be unaffected by the impending US steel import tariffs.

The stock climbed as much as 6.8% in early trade after two days of declines, to hit its intraday high of RM5.31. At 4.12pm, Press Metal shares were up 19 sen or 3.82% at RM5.16, with 19.74 million shares done. Its market capitalisation stood at RM20.09 billion.

The counter declined about 10% over the past two days to close at RM4.97 yesterday.

RHB Investment Bank Bhd analyst Mohd Shafiq Salam views the planned tariff as neutral, adding that the impact on global aluminium prices and Press Metal would be minimal, considering the US accounts for less than 10% of the world's aluminium consumption.

He noted that 71% of US aluminium imports are sourced from Canada and Russia and added that it would not be easy to revive the country's aluminium production.

"We believe it would not be easy to revive US's aluminium production, as the industry requires cheap electricity to be competitive — which is not the case there, as electricity is mostly generated by coal and natural gas.

"Also, it takes about three years' lead time to build a new smelting plant. Hence, consumers in the US might have to import the aluminium anyway," he wrote in a note.

Meanwhile, he highlighted that China is the world's largest producer and consumer of aluminium, accounting for over 50% of global aluminium production and 3% of global consumption.

Global demand is also still intact, with global consumption expanding at a CAGR of 5.1% since 2015 and is expected to continue growing, supported by demand from the transportation sector.

"As the knee-jerk sell-off of Press Metal shares now present an opportunity to buy, we upgrade our call from neutral.

"Our target price stays at RM5.85. Key risks include lower aluminium prices that could hurt profitability and investor sentiment towards the counter. Meanwhile, unexpected power supply interruptions at the smelting plant may damage machinery and disrupt operations," said Mohd Shafiq.

In the statement yesterday, Press Metal came out to say that it will be minimally affected by US President Donald Trump's sweeping tariffs on steel and aluminium imports.

"We understand that the market is concerned after learning about the potential tariff on aluminium which may be implemented by the US. We have been monitoring this development and we feel the current direct impact to our business is minimal," it said, adding that its exposure to the US market is less than 1% of its total revenue.