GLOVE makers are continuing to ramp up production of nitrile gloves as they compete for market share in the high-margin product in order to satisfy European demand and offset the recent hike in energy prices.
The “big four” glove makers — Hartalega Holdings Bhd, Top Glove Corp Bhd, Kossan Rubber Industries Bhd and Supermax Corp Bhd — are moving towards realigning their product mix, putting emphasis on nitrile glove production over that of natural rubber (NR) and vinyl gloves.
Top Glove and Hartalega are the leading players in the nitrile segment. Hartalega is the world’s largest nitrile glove producer with a production capacity of 14 billion pieces per annum while Top Glove currently produces 10 billion pieces. All four firms plan to increase their nitrile production capacity by at least 22% by the end of this year.
In a pre-emptive move, Kossan is already gearing up to become the world’s biggest nitrile producer by end-2015, overtaking both Hartalega and Top Glove in the process. The firm plans to ramp up its capacity by 59% this year to 13.5 billion pieces, from 8.5 billion presently.
As part of its aggressive expansion plan, Kossan recently acquired land in Klang to house its new manufacturing plant, which is expected to add another five billion pieces per annum in capacity.
“We hope to have a product mix ratio of 70:30 between nitrile and NR products by the end of this year. There are three new plants in the pipeline, with the first one expected to be operational very soon,” says Edward Yip, Kossan’s general manager of corporate affairs and business development, at the Spotlight on Malaysia 2014 forum organised by Bursa Malaysia last week.
Nitrile’s appeal comes from its position as a premium product over NR gloves. Synthetic rubber products have become the preferred choice by consumers due to the increasing prevalence of latex allergies, which may occur with prolonged contact to NR gloves.
Hartalega is the clear leader in this segment because of its consistently high utilisation rates and its preference for nitrile production, which contributed 92% of total sales during the first half of its financial year ending March 31, 2014 (1HFY14).
Alongside Kossan, Supermax is looking to replicate this strategy with a planned expansion of its nitrile capacity by 128% this year, according to data compiled by Maybank IB Research.
While Top Glove plans to increase its own nitrile capacity by 22%, the company is currently encumbered by the margin squeeze in its NR gloves segment due to higher latex prices and low average selling price. Also, it is still seeing operating losses at its manufacturing plants in China.
Source: The Edge
Published: 30 Jan 2014