Thailand’s rubber firm Sri Trang Agro-Industry will acquire a glove factory in Thailand this year. In addition to the two new factories which will be completed by 2020, Sri Tang plans to acquire the factory to increase its medical gloves production to compensate for the plunging rubber prices.
This year, the world’s largest fully-integrated natural rubber (NR) firm is planning to produce 21 billion gloves to reach the target of 30 billion gloves by 2020.
Executive Director Veerasith Sinchareonkul is optimistic that the demand for medical gloves will rise due to the rising ageing population and emerging middle class segment in developing nations. A growth of 7% over 2018-19 is recorded for the medical gloves demand and is expected to grow faster for the next 15 years.
However, the continued drop of NR prices makes exporting less profitable. For the past two years, the price of NR dropped by 50% due to oversupply in Indonesia, Malaysia and Thailand. Thus, Sri Tang needs to increase its medical gloves production to counter the risk.
“We have a lot of experience managing a market with falling prices,” Sinchareonkul said.
“As raw material prices are lower; factories have lower costs to produce gloves. If the price keeps going down, we can keep the glove price the same for a while,” he added.
The firm gets 80% of its revenue from NR while 20% is from medical gloves.