[Special Stock] Daheo AL, Aluminum Price Rally Driven by Green Wave... Dominant Position in Aluminum Sheets

[Asia Economy Reporter Hyungsoo Park] Amid the ongoing rally in raw material prices, aluminum prices are also maintaining a strong upward trend. In particular, expectations are growing that aluminum demand will surge worldwide due to the global competition for decarbonization. This is interpreted as the reason behind the sharp rise in the stock price of Daecho AL, a company specializing in aluminum rolling and extrusion.

As of 9:52 a.m. on the 11th, Daecho AL is trading at 3,305 KRW, up 21.06% from the previous day.

At the London Metal Exchange (LME), aluminum prices surpassed $2,500 per ton for the first time in 37 months. This is the first time since April 19, 2018 (when it was $2,602.5 per ton) that prices have exceeded $2,500.

Hwang Byung-jin, a researcher at NH Investment & Securities, raised the 12-month aluminum price target to $2,800 per ton. The long-term target was set at $3,000.

Researcher Hwang explained, "Like copper and nickel, aluminum is a representative industrial metal expected to see increased demand from renewables such as electric vehicles (EVs) and solar power. Aluminum, which is widely used in transportation sectors such as automobiles and aerospace, as well as in construction, electricity, and packaging, is currently supported by a short-term recovery in demand across industries."

He added, "The global growth of green technologies will also act as a driving force to strengthen long-term aluminum demand prospects. So far, China has expanded its global aluminum market share to about 60% based on its cheap energy intensity compared to competing countries."

He further noted, "Strict production capacity controls in China's 'electrolytic aluminum' industry, which heavily depends on coal (thermal) power generation, will limit the global aluminum supply growth and continue the trend of inventory reduction."

Daecho AL recorded an operating profit of 2.59204 billion KRW last year, turning profitable. During the same period, sales increased by 3.3% year-on-year to 121.42644 billion KRW. Net profit also turned positive at 652.57 million KRW.

A company official explained, "Focusing on high value-added aluminum materials such as those for secondary battery cases led to increased orders, and the resulting higher production yield contributed to an operating profit increase of about 3.5 billion KRW compared to the previous year."

Daecho AL has held a dominant position in the domestic premium aluminum sheet market for a long time. The company has replaced most of the premium aluminum sheets, which were previously entirely imported, with domestically produced ones. It holds a high market share in the high-priced sheet market. Particularly, it produces a wide variety of small-volume products, exporting about 30% of its products to Southeast Asia and other regions. With continuous research and development to enhance quality and diversify sales channels, the company plans to maintain its profitability this year as well. Especially, by expanding operations in the automotive market where demand for lightweight parts is increasing and electric vehicles are growing, it plans to create new opportunities.

CEO Noh Young-ho of Daecho AL said, "Demand for our aluminum products is steadily increasing in the secondary battery and energy storage system (ESS) markets needed for electric vehicles and others. As an innovative company in the aluminum market, we will do our best to expand our sales channels into advanced industrial markets," expressing his determination.