KUALA LUMPUR (Mar 10): Press Metal Bhd rose as much as 8% as anticipation of near-term aluminum supply deficit led to expectation of higher prices for the commodity.

Press Metal (fundamental: 0.95, valuation: 2.1) rose as much as 25 sen to RM3.44, before paring gains.

At 4.21pm, the eighth-largest gainer on the exchange, was traded at RM3.34, with some eight million shares having changed hands.

RHB Research Institute Sdn Bhd analyst Ng Sem Guan said a deficit in aluminum supply since last year is likely to continue in the short- to mid-term. “There has been a drop in overall high-cost capacity outside of China,” Ng told theedgemarkets.com.

Ng’s comments followed a Reuters report on Alcoa Inc — one of the top global aluminum players.
The report indicated Alcoa's cost-efficiency exercise on operations could cut 14% of its global smelting capacity and 16% of its global refining capacity.

Alcoa had said it would review 500,000 tonnes of smelting capacity and 2.8 million tonnes of refining capacity for possible curtailment or divestiture over this year, as the benchmark aluminum price on the London Metal Exchange has been nearly flat in the past one year.

The report stated Alcoa's review could result in partial and full plant curtailments, permanent shutdowns and divestitures.

On Press Metal, Ng said the company could gain by an increase in production volume and slightly higher aluminum prices this year.

Ng said the company's higher efficiency was expected to boost its core profit by 40% in the current and next financial year.

He said although commodity prices were low, Press Metal was partly cushioned by the weak ringgit, as its sales were conducted in the US dollar.
 
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)