Press Metal drops 15.6% despite aluminium fundamentals intact

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KUALA LUMPUR (Sept 26): Shares of Press Metal Bhd dropped as much as 15.6% in morning trade today despite the fundamentals of the aluminium industry remaining intact.

At morning's close, the aluminium smelter's share price lost 40 sen or 6.3% to RM5.90. It had earlier fallen to a low of RM5.32, near a two-month low of RM5.27 as at end-July. This compared with the stock’s peak at RM7.37 earlier this month.

The second top loser saw trades of some 7.9 million shares.

Falling in tandem were its warrants, PMetal-WC. It dropped 35 sen or 8.4% to RM3.83. The third top loser saw some 2.3 million units done.

RHB Research Institute Sdn Bhd analyst Ng Sem Guan told theedgemalaysia.com said there are no changes to the solid fundamentals of the aluminium industry despite the sell-down of Press Metal shares.

“The selling is crazy, but we reiterate the industry's fundamentals are intact in the medium term,” he said via telephone.

Noting that the London Metal Exchange’s (LME) aluminium cash price has declined, Ng said this was due to the strengthening US dollar.

He added that lower aluminium prices was also in tandem with the general decline in other commodities.

According to Ng, the physical aluminium premiums, which are the amount paid on top of the LME price for immediate delivery of the metal, has been on an upward trend this year.

He said physical premiums in the Japan market for the first quarter stood at US$255 per tonne. They rose to US$365 per tonne in the second quarter and climbed higher to US$365 per tonne in the third quarter.

For the fourth quarter, Ng said the physical premiums were even higher at US$404 per tonne.

“These strong prices, hence, support our call that the industry fundamentals are still strong, if not, even stronger,” said Ng.