Press Metal Aluminium recorded 36% YoY drop in net profit in Q2 2019; Revenue declined 12.5%

Press Metal Aluminium Holdings Bhd, the leading aluminium producer in South East Asia, has reported a drop of 36 per cent in net profit in the second quarter of the year ended on June 30. The profit came in at RM102.89 million, compared to RM160.6 million in the same period last year.

With this, earnings per share in Q2 2019 came down to 2.56 sen from 4.15 sen year-on-year, while revenue dropped 12.5 per cent from RM2.44 billion in Q2 2018 to RM2.13 billion.

The total net profit for the first half of the year (H1 2019) stood down as well at RM217.99 million from RM311.08 million in the same period last year. Revenue for the same period contracted from RM4.56 billion in H1 2018 to RM4.3 billion.

Nevertheless, Press Metal’s board of directors have approved a second interim single tier dividend of 1.25 sen per share, amounting to RM50.44 million, in respect of FY19, payable on Sept 24.

The company said its low-cost model ensured profitability, while the former had been operating in a challenging macro environment exacerbated by ongoing trade tensions.

With alumina prices dropping to approximately US$300 per tonne in August 2019 from the year high of US$417 per tonne, Press Metal expects profit margins to improve in the latter part of 2019.

“Aluminium, being the emerging metal of choice with its green characteristics, has the potential to further replace traditional materials. The long-term prospects are promising as we foresee wider applications across multiple industries,” the aluminium producer added…

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RIISA, C-TPAT Validation Process

The Customs Trade Partnership Against Terrorism (CTPAT) program is U.S. Customs and Border Protection’s (CBP) premier trade security program. The purpose of CTPAT is to partner with the trade community for the purpose of securing the U.S. and international supply chains from possible intrusion by terrorist organizations. CTPAT requires the trade company participant to document and validate their supply chain security procedures in relation to existing CBP CTPAT criteria or guidelines as applicable. CBP requires that CTPAT company participants develop an internal validation process to ensure the existence of security measures documented in their Supply Chain Security Profile and in any supplemental information provided to CBP. As a part of the CTPAT process, CBP CTPAT Supply Chain Security Specialists (SCSS) and the CTPAT participant will jointly conduct a validation of the company’s supply chain security procedures. The validation process is essential to verifying the company’s commitment to CTPAT.

Objective

The purpose of the validation is to ensure that the CTPAT participant’s international supply chain security measures contained in the CTPAT participant’s security profile have been implemented and are being followed in accordance with established CTPAT criteria or guidelines. The validation team evaluates the status and effectiveness of key security measures in the participant’s profile to make recommendations and recognize best practices where appropriate.

Validation Principles

The guiding principle of the CTPAT program is enhancing and ensuring supply chain security though a government-industry partnership. The CTPAT program is voluntary and designed to share information that will protect the supply chain from being compromised by terrorists and terrorist organizations. The validation process will enable CBP and the CTPAT participant to jointly review the participant’s CTPAT security profile to ensure that security actions in the profile are being effectively executed. Throughout the process there will also be the opportunity to discuss security issues and to share “best practices” with the ultimate goal of securing the international supply chain.

CTPAT validations are not audits. In addition, they will be focused, concise, and will last not longer than ten working days.

Based on the participant’s CTPAT security profile and the recommendations of the validation team, Headquarters will also oversee the specific security elements to be validated.

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Coca-Cola follows suit and announces shift from plastic to aluminum, reinforcing the Aluminum Can Revolution 2.0

Coca-Cola announces moving its Dasani water to aluminum packaging. In a news release today, Coca-Cola announced putting its Dasani brand of water into aluminum packaging as part of a pipeline of sustainable packaging innovations. The new aluminum cans will launch locally in the Northeastern part of the US next month and expand to other regions in 2020. The new aluminum bottle will become available in mid-2020.

HARBOR coined the term “Aluminum Can Revolution 2.0” based on the forecast of growing demand for aluminum cans and aluminum cansheet in the wake of the environmental challenges of plastic waste. Decades ago, during the late 1970’s to the mid 1990’s, aluminum cansheet demand growth was robust from material substitution from steel to aluminum; what HARBOR has called the “Aluminum Can Revolution 1.0”. During the late 1990’s to as recent as a year ago, there was essentially no structural growth in aluminum cansheet demand. Now, boosted by material substitution from plastic to aluminum, the industry is entering a period of growth; the “Aluminun Can Revolution 2.0”.

PepsiCo announced a similar shift from plastic to aluminum in late June. PepsiCoannounced that it would no longer package bubly (sparkling water beverage) in plastic and will begin offering its branded water, AQUAFINA, in aluminum cans to US food service outlets (sporting events, restaurants) with plans to test the move to aluminum in the retail market. These changes will go into effect in 2020.

Additionally, both Coca-Cola and PepsiCo have stepped away from a plastics lobbying group. Coca-Cola and PepsiCo have stopped participation with the Plastics Industry Association, whereby they believe participation in such an association could taint their images as companies working to find solutions to plastics pollution.

US domestic rolling mills with capability to produce aluminum cansheet are poised to gain as they are able to switch product mix, utilize scrap at historically low prices, and meet the increased demand.

Copyright: This report and its content is confidential, proprietary, in some cases trademarked and/or copyrighted, and constitute trade secret(s) material of HARBOR Aluminum Intelligence Unit, LLC, there use is for authorized subscribers only. No portion of this report may be photocopied, reproduced, retransmitted, distributed or otherwise redistributed electronically, in print or verbally without prior written authorization from HARBOR Aluminum Intelligence Unit, LLC.

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Changes to Aluminum Tracking Codes Will Help Address Product Misclassification, Transshipment, Duty Evasion

  • HTS codes are used to classify all goods, and for tracking global trade flows.
  • The Aluminum Association requested 75 changes to the system to more accurately classify aluminum and aluminum products in “Chapter 76” of the Harmonized Tariff Schedule.
  • The Interagency 484(f) Committee (which includes representatives from the USITC, Census Bureau, Customs and Border Protection (CBP) and other affected agencies) approved 41, denied 7 and deferred 27 of the requested changes.[1]
  • This was an unusually high number of requested modifications and successful approvals.
  • The new aluminum HTS codes went into effect on July 1, 2019.
These changes will enable better and more accurate tracking and monitoring of aluminum trade flows, supporting free and fair trade in the marketplace.
  • The new codes specify aluminum and aluminum products with greater precision consistent with the market realities of today.
  • This will make it easier for government officials and the industry to identify and address aluminum misclassification, transshipment and evasion of duties.
  • For example, the industry was recently successful in a case against Chinese importers unfairly dumping subsidized common alloy aluminum in the U.S. market.
  • Some of the approved changes, and those still under consideration, will provide for easier identification of trade flows in the common alloy market, and make it easier to identify potential attempts to evade import duties.

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Rusal targets increased share of value-added aluminum products

Rusal’s 50:50 joint venture in the Sverdlovsk region with cabling and wiring products developer ELKA-Cable that launched its first line in mid-2017 — has now completed work allowing it to make aluminum-core cables.

Ramp-up to its nameplate capacity of 4,400 mt/year (aluminum net-weight in end-products) will take three years while certification for its products, which are new to the market, will take a while, said the spokeswoman.

BKZ will make three types of cables designed for power grid, petroleum and oilfield service companies in Russia and the CIS: oil submersible cable, self-supporting insulated conductor, and flexible conductor. They all contain in-house made aluminum wires, strands and conductors.

BKZ is Russia’s first producer of such cables, according to Rusal, which supplies aluminum alloys to Bogoslov.

BKZ is Rusal’s fourth downstream business. The other three are wheel, powder and foil making assets, and all process Rusal’s primary aluminum and alloys.

Last year, they sold a combined 1.66 million mt of products, roughly 45.5% of the company’s 3.67 million mt overall sales.

Increasing in-house aluminum processing and the share of value-added products in its portfolio remains Rusal’s strategic priority, the spokeswoman said.

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Bauxite price increases by RMB20/t after three months; A00 aluminium ingot price extends rise

After remaining muted for about three months at RMB 540 per tonne, the average price of Bauxite (6.0≤Al/Si<7.0)Shanxi has recorded a growth of RMB 20 per tonne to RMB 560 per tonne, as of July 31, learned Shanghai Metals Market. This is the third change in Bauxite (6.0≤Al/Si<7.0)Shanxi price this year, followed by a price drop from RMB 570 per tonne to RMB 550 per tonne, as of January 28, and then another decline on April 24 to RMB 540 per tonne.

The price of Bauxite (6.0≤Al/Si<7.0)Henan, on the other hand, has registered a plunge by RMB 30 per tonne to RMB 520 per tonne.  From May 5 to July 30, the Bauxite (6.0≤Al/Si<7.0)Henan price remained restrained at RMB 550 per tonne.

Backed on the rise in bauxite price, the A00 aluminium ingot price has also extended its growth from RMB 13,900 per tonne to RMB 13,910 per tonne, as of July 31, found Shanghai Metals Market. The average prices are expected to range between RMB 13,890 per tonne and RMB 13,930 per tonne, with spot contract to be traded at a discount price of RMB 10 per tonne to a premium price of RMB 30 per tonne.

The A00 aluminium ingot price in Tianjin has seen the highest rise by RMB 40 per tonne to RMB 13,920 per tonne, followed by the hike in Gongyi by RMB 20 per tonne to RMB 13,780 per tonne. In Shenyang, the A00 aluminium ingot price has increased by RMB 15 per tonne, while in other major cities the price has risen by RMB 10 per tonne.

As far as other input costs are concerned such as that of alumina, prebaked anode, aluminium fluoride, and aluminium powder, all remained restrained today at RMB 2,475 per tonne, RMB 3,137 per tonne, RMB 9,850 per tonne, and RMB 6,400 per tonne, respectively.

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Rusal Reports 20.8 Percent Rise In Aluminium Sales During Second Quarter

Russian Federation aluminium titan U.C. Rusal released operating results for the second quarter of 2019 on Friday. Production of aluminium and alumina remained essentially level, with sales in the quarter increasing to catch up on a backlog of product trapped in inventory due to last year’s OFAC sanctions.

In the first quarter Rusal produced 938 thousand metric tons of primary aluminium, up by 1 percent on the quarter. Krasnoyarsk led the way with 255 thousand metric tons of aluminium production, besting the Bratsk smelter by 3 million metric tons. Overall, Siberian smelters accounted for 93 percent of the firm’s total aluminium output in the quarter.

Sales of aluminium totaled 1,082 thousand metric tons in the second quarter, beating the prior quarter by 20.8 percent. Rusal credits a sell-down of inventories hemmed in last year by sanctions placed upon it by the United States government for the rise. Sales of value-added products rose by 59.9 percent on the quarter due to a planned gradual recovery in the overall sales mix.

Rusal’s first-quarter output of alumina totaled 1,918 thousand metric tons, off by 0.7 percent from the first quarter. Aughinish Alumina led production with 470 thousand metric tons, leading Nikolaev Alumina by 60 thousand metric tons. Rusal’s refineries in Russia made up about 36 percent of the quarter’s total refined product.

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Aluminium makers expect prices to pick up even as supplies stabilise

Indian producers are hopeful of prices strengthening on the London Metal Exchange (LME) in the rest of this calendar year. supplies have stabilised after the lifting of sanctions on Moscow-based UC Rusal (the world’s second largest producer) by the US government.

Also, the decks are now clear for Norsk Hydro’s Alunorte refinery in Brazil (the world’s biggest, operating at half capacity since early 2018, when Hydro admitted it had made unlicensed emissions of untreated water) to operate at peak rated capacity. Even so, 2019 will see a shorage of 1.5-1.7 million tonnes.

“Therefore, we are expecting LME prices of to show an upward trend in the (year’s) second half,” Satish Pai, managing director, Hindalco Industries, said at the company’s recent earnings conference call.

According to a World Bank commodities report, aluminium prices on the LME will average $1,940 a tonne in 2019. These are currently driven by global macro economic uncertainty and the festering trade conflict between America and China. As a fallout, LME prices are down about 20 per cent year-to-date, at $1,809 a tonne. These had rocketed to $2,246 a tonne in April 2018, after the US curbs on UC Rusal, triggering panic in supplies.

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‘Not a dustbin’: Cambodia to send plastic waste back to the US and Canada

Cambodia has announced it will send 1,600 tonnes of plastic waste found in shipping containers back to the US and Canada, as south-east Asian countries revolt against an onslaught of rubbish shipments.

China’s decision to ban foreign plastic waste imports last year threw global recycling into chaos, leaving developed nations struggling to find countries to send their trash.

Eighty-three shipping containers full of rubbish were found on Tuesday at Sihanoukville, Cambodia’s main port, according to a spokesman for the country’s environment minister.

“Cambodia is not a dustbin where foreign countries can dispose of out-of-date e-waste, and the government also opposes any import of plastic waste and lubricants to be recycled in this country,” he said.

Neth Pheaktra said 70 of the containers were shipped from the US and 13 came from Canada. Both countries are major exporters of such waste.

A government committee established to look into the matter will investigate how and why the containers ended up in Cambodia, he said. He added that any company found to be involved in bringing in the waste would be fined and brought to court.

Images of officials inspecting the containers, stuffed with bundled plastic, riled up Cambodian social media users.

The trash delivery was a “serious insult”, Transparency International Cambodia’s executive director, Preap Kol, said in a Facebook post.

Tuesday’s discovery followed a statement at a cabinet meeting last week by the prime minister, Hun Sen, that Cambodia is not the dumping ground for any kind of waste, and does not allow the import of any kinds of plastic waste or other recyclables.

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Macro uncertainties led to corrections in aluminium, copper, zinc prices: Icra

Rating agency Icra July 3 said macroeconomic uncertainties led to corrections in global prices of aluminium, copper and zinc in the last one year. It further said that the production growth of these three non-ferrous metals was even lower than the rise in demand.

“Even though international prices of the three non-ferrous metals viz. aluminium, copper and zinc have witnessed corrections of 20 per cent, 13 per cent and 16 per cent, respectively in the last one year, primarily due to macroeconomic uncertainties on the back of ongoing trade wars and other country-specific factors, the fundamental supply-demand balance suggests otherwise,” Icra said in a statement.

While global consumption growth of aluminium and copper during the first quarter of 2019 was muted at 1.4 per cent and 0.8 per cent, respectively, as against 4 per cent and 2.3 per cent, respectively, in 2018, consumption of zinc registered a de-growth of 1.3 per cent as against 0.3 per cent de-growth in the last year.

“Despite muted consumption levels, markets of the three key non-ferrous metals continued to remain in deficit in this period, with shortages in fact expanding on a Y-o-Y basis, as production growth was even lower than the growth in demand,” it said.

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