KUALA LUMPUR (April 15): Electricity cable manufacturer Master Tec Group Bhd expects higher revenue growth and a demand shift towards aluminium in conductors, amid the recent surge in copper prices.

Production cost for copper conductors has increased by around 5% and the company is passing on the higher cost to its customers, chief executive officer Tee Kok Hwa told The Edge. Master Tec has also observed the rising trend among customers preferring aluminium conductors, he noted.

“The demand for aluminium conductors as an alternative to copper conductors will increase in a wider range of applications,” Tee said.

Prices of copper — used in everything from electrical wires to water pipes — have surged to near two-year high, amid supply concerns and strong demand.

The three-month copper futures rose to a 20-month high at US$9,457.50 a tonne on London Metal Exchange on Friday (April 12), while the three-month primary aluminium price advanced by 1.63% to US$2,494 per tonne.

Aluminium conductors were mainly used in the utility market segment, though “people started accepting aluminium conductors in sub-main cables for commercial and non-commercial buildings” after the previous round of copper price rally in 2022, Tee said.

With the renewed surge in copper prices, the use of aluminium may expand to other applications, such as power cable for infrastructure, he said.

Shares of Mastec Tec have more than doubled since its listing on Jan 29 this year, and values the company at RM1.07 billion on Bursa Malaysia’s ACE Market. The stock was trading at RM1.05 at 3.30pm on Monday versus its initial public offering (IPO) price of 39 sen a share.

The sharp rally prompted an unusual market activity query from Bursa Malaysia, to which Master Tec said it was unaware of any reason that could explain the spike.

Master Tec is mainly involved in the manufacturing and distribution of power cables, control and instrumentation cables, and solar direct current power cables. The company raised RM61.66 million from the IPO, which was oversubscribed by more than seven times by the public.

Tee said the company is raising its production capacity for aluminium-cored wires and cables by the fourth quarter of 2024, with two new production plants which can manufacture both medium-voltage and low-voltage power cables.

For the financial quarter ended Dec 31, 2023 (4QFY2023), Master Tec reported a net profit of RM4.53 million, on the back of RM82.19 million in revenue. For FY2023, it reported a net profit of RM23.94 million, on the back of RM285.44 million in revenue.