RHB Investment Bank Bhd (RHB Research) has maintained its OVERWEIGHT stance on the basic materials sector and still names Press Metal Aluminium Holdings Bhd (Press Metal) as its top pick, as the research house sees aluminium supply constraints supporting the stock despite recent price weakness.
RHB Research said Press Metal has experienced a gradual sell-off following the retreat in aluminium prices, which are currently trading around US$3,000 to US$3,100 per tonne. However, the research house believes the stock remains attractive due to its structural deficit thesis following supply disruptions linked to the Middle East conflict.
The research house noted that aluminium prices have fallen 19% over the past four weeks as peace discussions between the US and Iran have supported a gradual reopening of the Strait of Hormuz, a key route for metals produced in Gulf countries that account for 8% to 9% of global supply.
RHB Research said higher aluminium production in China and weaker copper prices have added further pressure on prices. China’s aluminium output increased 4% month-on-month in May, reaching an annualised production rate of 46 million tonnes, above the government’s 45 million tonne cap.
For Malayan Cement Bhd (Malayan Cement), RHB Research expects margin recovery from 2QFY2027 onwards as coal prices gradually ease following improving geopolitical conditions. Newcastle coal prices have declined 15% over four weeks to US$129 per tonne, although the company’s secured coal inventory for 1QFY2027 remains higher at around US$90 per tonne.
RHB Research maintained its 2026 London Metal Exchange aluminium price assumption at US$3,250 per tonne but lowered its 2027 forecast to US$3,050 per tonne from US$3,150 as a more conservative outlook.
The research house said Press Metal remains its preferred pick due to the expected aluminium supply deficit, while Malayan Cement also offers value as the stock trades below historical averages with improving operational efficiency and resilient earnings margins.
