Press Metal sees indirect benefits from US-China trade spat

PETALING JAYA: Press Metal Aluminium Holdings Bhd, which is on an acquisition trail, looks to be benefiting from trade moves which is spooking the global markets, in particular sanctions against Russian aluminum producer Rusal and US tariffs on aluminium and steel.
Group CEO Tan Sri Paul Koon said the US Treasury Department’s sanction against Russian aluminium giant Rusal has made it difficult for Rusal to sell their products, especially value-added products.
He said the group has seen at least 10% increase in sales of its value-added products following the sanction, as Rusal’s customers seek out alternate sources and turn towards value-added products.
“In fact, at the moment we are not able to supply enough because all of a sudden they (Rusal’s customers) turn to us, we have limited (supply). All these are contracted. We have some additional supply but not huge. So if they want more of it, we will have to say that’s all we have,” he told reporters at its AGM today.
Koon said even if the sanction is eventually over, a lot of the customers would want to rethink their position in terms of the quantity that they would buy from Rusal, to avoid a sudden shortage in supply.
Meanwhile, Koon said the US tariffs on aluminium imports have turned out to indirectly benefit Press Metal. Earlier in March, the group said it would not be affected by the restrictions, citing small exposure to the US market.
He said with Australia being exempted from the US tariffs, the premium in the region has risen. Last month, it was announced that Australia and Argentina would be excluded from 25% steel and 10% aluminium tariffs.
“Australia is quite big (player in the region). So for starters you see Australian metals are going to go to the US because with the 10%, it is more than enough to cover their logistics, they all will go, which indirectly is something that would benefit us,” he added.
Commenting on growth this year, Koon said the group is on the lookout to expand via acquisitions, after focusing on organic growth for the past seven to eight years.
“Locally, you probably would not find that many (options) especially on the upstream side so it has to be more outside of Malaysia and good assets do not easily come by so we have to look at it, discuss about it. Sometimes it may not be available. We have some in mind but we are still in the progress of making it work,” he said.
He said it intends to look at growth opportunities especially in areas that complement its operations, such as its acquisition of rod producer Leader Universal Aluminium Sdn Bhd, which it bought for RM96 million.
As for aluminium price, Koon said it is still steady at the current level of US$2,200 (RM8,800) to US$2,300 (RM9,200) per tonne and expects the price to maintain till year-end.
Press Metal’s share price fell 5.07% or 22 sen to close at RM4.12 today with a total of 3.28 million shares traded.