Malaysian research firm Affin Hwang Research says the country’s rubber glove manufacturers could benefit from the trade spat between the US and China, since tariffs are being imposed on rubber/plastic gloves from China.
The research house notes that the gloves are on the US$200 billion list of Chinese goods that will be subject to a 10% import tax.
“The 10% tariff on medical gloves (rubber/synthetic and plastic) will certainly hamper China manufacturers’ competitiveness, as gross profit margins for the efficient Malaysia manufacturers are only at 15-20%, in our view.”
It adds that Malaysia exporters will be able to benefit from this, building on the 60% market-share base.
Affin Hwang noted that the US consumes 30% to 25% of the world’s medical gloves, and the introduction of the tariff will likely derail China manufacturer’s expansion plans to produce nitrile gloves in the near term.
It added that some 70% of the medical gloves exported from China into the US are vinyl gloves, with the remaining 30% being rubber/synthetic rubber.
It goes on to say that the price hike would allow users to switch from vinyl gloves to rubber gloves, due to the price difference.
“If China were to continue with its strict environment policy during the winter months (starting in October), we expect vinyl glove prices to rise further.”
The research house further added that it is not concerned about the “Big 4” expanding their capacity by 10% to 15% despite historical demand growth of 8% to 10% as industry players are expected to phase out their expansion plans to protect margins if needed.
It added that demand may also receive a boost from the switch from vinyl gloves.