The risk of overcapacity and pricing competition could maim Malaysia’s competitive edge in rubber gloves production, some analysts say.
The country is a manufacturing base for 125 glove makers and supplier for about 63% of the world’s requirement for gloves.
Recent reports say that Malaysia’s major rubber glove manufacturers, Top Glove, Kossan, Supermax and Hartalega are ramping up production to the point of overcapacity. Their combined additional production totals to about 9 billion pieces, which will be made on different periods: Kossan is increasing its output to 2.5 billion pieces this year; Supermax, in view of a new 5.3 billion units capacity plant is increasing production by 2.5 billion pieces; Top Glove is accruing an additional 2 billion pieces by end of the year, while Hartalega is expected to increase production by 2 billion pieces.
The recent sector update of Affin Investment Bank attributes the current slack in the year to date (YTD) performance of the rubber gloves sector to capacity expansion move by glovemakers. The situation has triggered sell-off in rubber gloves stocks on concerns of overcapacity. The banking firm says that the sell-off canunlock opportunity for investors to own a stake in the progressive rubber glove market. It says that the rising global healthcare spending fuels the steady growth of the sector.
CIMB Investment Bank, on the other hand, implies a different perspective on the capacity expansion . In the “Navigating Malaysia” report, thefinancial firm says that the current year’s earning will remain strong in light of the new capacity installed and lower and more stable latex and nitrile prices. Steady demand for nitrile gloves will also spur sales, it adds.
Several industry experts opined that the increasing demand especially from the medical and healthcare sectors will balance the oversupply.
The Malaysian Rubber Gloves Manufactures Association (MARGMA) says that export of rubber products increased to RM15 billion this year from RM14.6 billion posted in 2013. In the first quarter of the year, rubber products sales reached RM4 billion, 75% of which are accounted to rubber gloves, says MARGMA President, Lim KweeShyan. He adds that rubber gloves turnover is expected to climbto RM12 billion in 2014 from RM10.5 billion, the previous year.
The country’s rubber gloves exports are seen to rise by 8% to 178.6 billion pieces this year; The growth drivers are coming from the healthcare, food, electric, and automotive sectors.
The association recently signed a memorandum of understanding (MOU) with the Malaysian Rubber Export Promotion Council (MREPC) and nine key sponsors for an event that will draw attention to quality standards and regulations for gloves used in healthcare.
The 7th International Rubber Glove Conference and Exhibition (IRGCE), sponsored by rubber chemicals company, Excelkos; and glove makers, Hartalega, Kossan, Latexx Partners, Smart Glove, Supermax, Top Glove, WRP, and YTY, will be held 2-4 September at the Kuala Lumpur Convention Centre (KLCC), Malaysia.
Aptly themed, “Beyond Just Infection Control” , the bi-annual event is expected to draw 500 participants and 3,000 trade visitors from the country’s 185 export countries, says Lim.
According to MARGMA, the Conference will review, analyse, and provide critical information on the latest trends and development of the rubber glove and medical device industries, covering regulations and standards, innovations, productivity and competitiveness.
There will be conferences where key international and regulatory bodies from the US, Japan, China and Malaysia will present technical papers on standards and specifications, quality assurance and regulations on medical devices and protective gloves.