Malaysia: Affin Hwang Capital lowers aluminium price outlook for 2023-2025

Affin Hwang Capital, a specialist Malaysian investment banking group, has revised its projection for aluminium prices for the years 2023-2025. The investment banking group now anticipates average prices of $2,220/t, $2,300/t, and $2,400/t in the three years during this period. These prices reflect a decrease from the previous estimate of $2,550/t, as per a recent report in Alcircle.

Additionally, the company has adjusted its projection for carbon anode prices due to a decline in prices following the peak observed in June 2022, which was influenced by lower oil prices.

According to the company, carbon anode prices are expected to average around JPY 5,800/t throughout the year. The company also expects that there will be volatility in share prices ahead, as there are projections indicating that aluminium prices will reach their lowest point in the fourth quarter of 2023.

In the light of these developments, Affin Hwang has revised its profit forecast for Press Metal Aluminium Holdings Bhd. The company now predicts a 37% reduction in profit projections for 2023, followed by decreases of 24% and 10% for 2024 and 2025, respectively.

These revisions are primarily attributed to lower aluminium prices, decreased carbon anode costs, and a weaker ringgit. As a result of the adjustments made to its outlook and valuation, Affin Hwang has lowered its 12-month target price for Press Metal to RM 4.

Affin Hwang Capital has downgraded its rating on Press Metal to a "sell" recommendation due to the heightened probability of recessions in major economies. The company believes that the consensus profit projections for Press Metal are overly optimistic and anticipates a downward revision in the upcoming results release.

It also highlighted several factors that could potentially lead to positive outcomes beyond these predictions. These include the possibility of higher-than-expected Chinese demand for aluminium, a sustained increase in aluminium prices, and lower-than-anticipated costs of raw materials.

Note: This article has been published in accordance with an article exchange agreement between Alcircle and SteelMint.