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BUSINESS

Selling prices of gloves remain robust amid supply shortage: MIDF Research

18/02/2021 04:47 PM

KUALA LUMPUR, Feb 18 -- The average selling price (ASP) of rubber gloves is expected to remain robust in the next one-and-a-half to two years, since industry players are projecting shortage in nitrile gloves that could possibly last until 2023 due to the shortage in raw material supply, MIDF Research said.

The high raw material prices will lend support to the price of nitrile gloves, it said.

“Industry players are expanding at a faster pace to keep up with demand, but it is not done without challenges.

“Other than the shortage in nitrile rubber gloves, the industry is also facing a labour shortage due to the closure of international borders,” the research arm of MIDF Amanah Investment Bank Bhd said in a note today.

It noted that the established glove players expect to further automate their processes in order to reduce the number of workers per million pieces.

“Production challenges are among the main reasons why industry players foresee that demand will exceed supply in the near future,” it added.

“Malaysia supplies about 65 per cent of the world’s total rubber gloves, which means collectively, Malaysian glove companies have market leader advantages.

One notable growth driver of rubber glove demand is higher hygiene awareness in the developing nations, while in the developed countries, demand is driven by more stringent medical processes, an ageing population which leads to higher medical needs, as well as consumption in other services sectors.

“The gloves consumption is expected to remain high in 2021. We believe that mass testing and random testing will continue until a wide population is vaccinated.

“This is especially so if economies, social activities, and schools are to reopen while remaining safe. For example, in the US, US$50 billion is allocated to expand testing to buy rapid tests and increase laboratory capacity to support regular testing in schools so that they can safely reopen,” it said.

The research house also said that industry players also expect high demand for rubber gloves from the massive rollouts of vaccination programmes.

MIDF Research said four companies under its coverage had expanded by an estimated 21 per cent in calendar year 2020 compared to the preceding year when demand growth was estimated at 25 per cent.

It has maintained “buy” recommendations on Hartalega with a target price (TP) of RM18.25, Top Glove (TP: RM8.29), Kossan (TP: RM7.33) and Supermax (TP: RM13.83).

-- BERNAMA

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