Press Metal Aluminium Holdings Berhad SECTION 3 • CHARTING THE PATHWAY TOWARDS EXCELLENCE 22 THE MARKET WE OPERATE IN Geopolitical tensions and trade conflicts have shaped the global economic landscape in 2024, with cautious optimism prevailing despite persistent uncertainties. The International Monetary Fund’s World Economic Outlook projected a global real gross domestic product growth at 3.2%, slightly lower than 3.3% in 2023. Meanwhile, fluctuations in raw material prices, particularly alumina, have posed challenges for the aluminium industry, as production and supply chain disruptions continue to impact input costs of aluminium smelters globally. Amid these challenges, the global push for decarbonisation and clean energy have driven greater demand for aluminium, opening new avenues for sustainable growth. The increasing adoption of the “China Plus One” strategy was also expected to reshape supply chains in SEA, broadening access to alternative material sources and strengthening regional industry development. In response, strategic partnerships are being developed across the value chain to secure a stable supply of raw materials and support long-term business sustainability. These initiatives not only enhance resilience against economic and political uncertainties but also position the business to capitalise on emerging opportunities in an evolving global landscape. Outlook for 2025 As we enter into 2025, we continue to monitor global trade developments that may affect near-term economic conditions. While the broader outlook remains uncertain, we continue to observe medium- to long-term opportunities driven by increasing demand from renewable energy sector. These structural trends are expected to support sustained demand for aluminium. On a positive note, alumina supply tightness is expected to ease in 2025, with the start-up of new alumina refineries and the expansion of capacity at existing refineries. Additionally, demand for aluminium is forecast to grow, driven by increased needs in green industries such as EVs, renewable energy, energy transmission, and energy storage. The shift of manufacturing to the ASEAN region, driven by the “China Plus One” strategy and escalating trade tensions, is also expected to further boost demand for local and regional aluminium supplies. Given these factors, aluminium prices are projected to continue their upward trajectory in the coming years, with Bloomberg Intelligence forecasting a 2% growth in aluminium demand for 20251. Although the outlook remains positive, we remain cautious due to ongoing global geopolitical uncertainties. Aluminium Demand and Price Fluctuations Global Megatrend In 2024, the global aluminium market experienced significant price volatility, marked by a series of sharp fluctuations. Aluminium prices reached a high of USD2,700 per tonne by the end of May, building on a steady rise from January’s low of USD2,110. However, this upward trend was short-lived, with prices retracted to USD2,161 per tonne by the end of July. This correction was largely attributed to a weaker-than-anticipated growth outlook in China, where sluggish manufacturing activity and limited policy support for the industrial sector stifled broader economic expansion. Despite this setback, aluminium prices rebounded in the second half of the year, closing at USD2,516 per tonne. Several factors contributed to this resurgence. Sustained demand from industries such as grid infrastructure, solar energy, and EVs played a key role, alongside the rising price of alumina — a critical raw material in aluminium production. A major supply disruption in bauxite led to a 90% surge in alumina prices from January to December, which exacerbated aluminium smelting costs globally. In parallel, the US Federal Reserve’s decision to lower interest rates by one (1) percentage point since September 2024 helped to bolster investor confidence and improve the global economic outlook, further supported the aluminium prices as the year drew to a close. While demand for aluminium remained relatively weak in Europe, the Asian market proved more resilient. Economic recovery in Asia, driven in part by manufacturing relocations and diminished stockpiles among downstream manufacturers, resulted in increased demand. This trend is reflected in the rising premiums for aluminium in the region. Overall, global aluminium demand continues to trend upwards, driven primarily by the ongoing transition to renewable energy and the growth of EVs, although the pace of growth has slowed. Impact on Business Operations • Our profitability is influenced by LME’s aluminium prices, which are shaped by geopolitical instability, energy costs, economic performance, inflationary pressures, and the pace of green infrastructure adoption. Movements in alumina prices also impact production costs, thereby directly affecting overall profitability. • Economic conditions and macroeconomic trends in the Asian market impact Press Metal’s performance, as our revenue is derived from these regions. We mitigated these risks by expanding our VAPs and extrusions segment, as well as expanding into the upstream segment to secure our profit margins.
RkJQdWJsaXNoZXIy NDgzMzc=