AMS Advanced Material Bhd’s Managing Director Keh Teng Yang said rising aluminium prices have had a limited effect on the group’s profitability, supported by its contract-based business model as the company prepares for its ACE Market listing.

The London Metal Exchange (LME) aluminium price has moved above USD 3,400 (RM13,634) per tonne this year, driven in part by geopolitical tensions linked to the war in Iran. At the time of writing, prices have eased slightly to USD 3,254 per tonne, yet it records a year-to-date gain of about 8 per cent.

“We negotiate pricing before placing orders. It’s a pass-through model, where any increase in aluminium prices is passed on to our clients,” Keh said.

Also read: Alumina Ltd down 1.7%: heavy volumes push AWC among ASX’s most active stocks

AMS Advanced Material’s core operations include trading semi-finished aluminium and copper products, as well as processing semi-finished aluminium materials. The company supplies manufacturers, contractors and fabricators across sectors such as aerospace, semiconductor and automotive.

Keh noted that approximately 25 per cent of the business involves inventory stocking, which provides an opportunity to benefit from short-term price movements.

“When prices rise, we do see some upside from our inventory. For instance, with prices moving from USD 3,000 to USD 3,400, there is a small gain from the inventory we hold,” he explained.

At the same time, he acknowledged that the model also carries downside exposure when prices decline.

“Having said that, we are also exposed if prices go down. Nevertheless, our model is robust in the sense that fluctuations in LME prices do not significantly impact our bottom line because we are able to benefit from short-term price increases,” he added.

Must read: Key industry individuals share their thoughts on the trending topics

Plans to enter aluminium scrap recycling segment

Keh also outlined plans for AMS Advanced Material to expand into the aluminium scrap recycling business as part of its growth strategy.

Under this initiative, the company intends to collect scrap aluminium from existing customers and process it into saleable products for export markets. The activity is expected to create an additional revenue stream through its subsidiary, AMS Ecogreen.

The company is currently in the process of obtaining a “second-hand dealer licence”, which will enable it to commence scrap collection operations.

Don’t miss out- Buyers are looking for your products on our B2B platform

“We need to make sure that we get the licence and meet all the compliance requirements to embark on this venture,” Keh said.

According to its prospectus, the recycling operations will be based in Johor, with an expected processing capacity of approximately 17 tonnes per month. The company plans to begin operations in the first half of 2026, subject to licence approval, and has yet to finalise a site for the facility.

AMS Advanced Material launched its ACE Market initial public offering at a price of 29 sen per share on Friday, targeting raising RM46 million ahead of its listing scheduled for April 23.