Rubber Products (Gloves, Condoms etc)

[winston]

not vested

Tariffs on China to have limited impact on local gloves

This was an increase from the previous 7.5% to 50% and further to 100%, effective Jan 1, 2025 and Jan 2026 respectively.

We believe the additional 10% tariff on China’s medical and surgical rubber gloves would not necessarily create another round of higher-than-expected tariff-led average selling prices (ASPs) surge for Malaysian glove makers, as seen in the fourth quarter of 2024 (4Q24).

Believes that Chinese players will shift their focus to Europe and Asia from the US market, which is a mere shift in customer profile between Malaysian and Chinese players.

It noted the bonus points for Hartalega and Kossan are due to its records of not having been served with the Withhold Release Order (WRO) by US Customs and Border Protection (CBP).

While we remain optimistic about the gradual improvement in operating conditions for glove manufacturers, we believe that the recovery thesis for 2025 has already largely been priced in.

Source: The Star

https://www.thestar.com.my/business/bus ... cal-gloves

[winston]

Industry set to benefit from US tariffs

The tariffs being imposed on Chinese gloves may lead to US distributors shifting their purchase to Malaysian glovemakers such as Top Glove.

From February 2025, Chinese medical gloves face 60% tariffs from 50% and 110% tariffs in 2026 from 100%.

Such tailwinds allowed Top Glove to raise the average selling price (ASP) for its US nitrile gloves export by about US$1 per thousand pieces since Nov 24, and eventually towards the pre-pandemic level of US$23 per thousand pieces in 2025,” it said. Top Glove’s nitrile glove ASP stands at US$20 currently.

Annual US glove consumption has been projected at 70 billion to 75 billion pieces in 2023 to 2024, with China’s market share at 50%.

China’s estimated nitrile glove ASP stands at US$16 to US$17 per thousand pieces.

Chinese glovemakers have dumped their excess supply in Europe.

Source: The Star

https://www.thestar.com.my/business/bus ... us-tariffs

[winston]

Gloves – Malaysia Seasons Of Fall

In the last two months, the Malaysian gloves sector faced an unprecedented selldown due to a slower-than-expected recovery outlook on intensifying competition in non-US markets and US distributors’ frontloaded inventories.

This was also accelerated by US’ volatile trade policies, causing investors to turn risk-off.

Nevertheless, the sector is still on track for sequential earnings growth, with bargain valuations offering attractive risk reward balance.

Upgrade to OVERWEIGHT.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

Cheap China-made gloves expected to weigh on local producers

Competition from Chinese manufacturers have further amplified in the non-US markets, with some products being sold as low as US$15 per 1,000 pieces.

Chinese manufacturers have a cost advantage of US$3 to US$4 per 1,000 pieces due to their more efficient plants and reliance on coal as a fuel source, compared to Malaysian manufacturers relying on natural gas.

There are risks of further competition from China, as it explores expanding production capacity into surrounding countries in South-East Asia such as Indonesia, Thailand, and Cambodia.

Source: The Star

https://www.thestar.com.my/business/bus ... -producers

[winston]

Positive impact on glove makers from US tariffs

On China, the latest additional 34% tariff imposition is in addition to the 60% presently imposed on China’s rubber medical and surgical glove exports into the United States,” Kenanga Research noted.

For illustration purposes, it said a more than 100% tariff hike is expected to raise China-based glove producers’ average selling prices (ASP) to US$30-US$32 per thousand pieces from an assumed base case ASP at US$15 per thousand pieces.

However, it noted a 24% tariff is expected to raise Malaysian glove makers' ASPs of between US$22 and US$24 per thousand pieces from an assumed US$18 to US$20 per thousand pieces which is a steep 25%-32% discount compared the Chinese alternative.

The net effect is positive for Malaysia as any volume loss in non-US markets can be offset by higher demand from the United States, considering that the United States historically accounts for 35% to 40% of Malaysia’s total glove volume.

Source: The Star

https://www.thestar.com.my/business/bus ... us-tariffs

[winston]

US tariffs on Chinese gloves not enough to lift sector outlook, says AmInvest

By Adam Aziz

US tariffs on China-made gloves can help Malaysian players expand its market in the world’s biggest economy but are not sufficient to reverse the structural oversupply challenges in the global glove industry,

AmInvest projects supply to exceed demand through 2026, and only reach equilibrium in 2027. That is on the premise of 9% growth in demand per year in 2025-2027, down from 11% in 2024.

We remain cautious as supply dynamics, cost inflation, and strategic shifts by Chinese players continue to weigh on sector fundamentals.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/752286

[winston]

Structurally, HLIB Research remains upbeat on the glove sector’s medium-term outlook.

“We remain positive on the sector’s recovery trajectory, with demand-supply equilibrium expected by 2026,” it said.

Adding that Malaysia’s status as the lowest-tariff glove-exporting nation further strengthens its position in global trade negotiations, offering potential long-term tailwinds for domestic manufacturers.

Source: The Star

https://www.thestar.com.my/business/bus ... s-recovery

[winston]

Glove sector faces strain but growth expected

Downgraded its call on the sector to “neutral” from “overweight” as it foresees the volatile demand outlook continues to cloud near-term recovery prospects through 2026.

Global glovemakers may seize the 90-day tariff grace period to capitalise on higher US average selling prices (ASPs).

While temporary restocking could support near-term demand, the broader landscape remains under pressure from persistent global oversupply and limited pricing power.

Local glovemakers saw some cost relief as raw material and natural gas prices have eased and are showing signs of stabilising.

Local glovemakers saw some cost relief as raw material and natural gas prices have eased and are showing signs of stabilising.

Key risks to our call include higher/lower-than-expected ASPs, pace of demand recovery and aggressive capacity expansion by Chinese manufacturers.

Source: The Star

https://www.thestar.com.my/business/bus ... h-expected

[winston]

Trade truce sparks fresh uncertainty

Risk outweighs potential returns; D/G to NEGATIVE

The latest US-China tariff rollback may not favour Malaysia glove makers, in our view, as it could delay purchasing decisions due to ongoing uncertainty.

We believe a reversion to the previous tariff schedule on China gloves remains possible, depending on the outcome of ongoing negotiations.

At the same time, new capacity from China glove makers in Southeast Asia, expected from 2026, poses a growing supply risk.

In our view, these risks outweigh potential returns. We downgrade the Malaysia glove sector to NEGATIVE with corresponding rating cuts to SELLs on HART, KRI and TOPG.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/456797.pdf

[winston]

not vested

Malaysia’s glove-maker recovery stalls on softer demand, tariff risks — analysts

By Luqman Amin

Likely to face persistent headwinds from soft US demand, ongoing oversupply in non-US markets, and rising domestic costs.

Chinese producers are now offering gloves at ASPs of US$14–US$17 per 1,000 pieces, undercutting Malaysia’s ASPs of US$17–US$18 per 1,000 pieces for non-US markets.

structural oversupply remains a key overhang for the sector, coupled with the absence of near-term catalysts to support meaningful earnings rebound.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/757927