Written by Surin Murugiah
Wednesday, 20 October 2010 15:16
KUALA LUMPUR: The Malaysian Rubber Glove Manufacturers’ Association (Margma), whose members collectively supply 60% of the global rubber latex glove consumption, advised its members to raise glove prices in line with high raw material costs and continued weakening of the US dollar.
This may well explain the share price surge among the rubber glove makers on Bursa Malaysia yesterday.
Top Glove Corporation Bhd rose 19 sen to RM5.68 Supermax Corporation Bhd was up 14 sen sen to RM4.65, Latexx Partners Bhd up four sen to RM2.86, and Kossan Rubber Industries Bhd gained two sen to RM2.86.
But Hartalega Holdings Bhd shed four sen to RM5.42 while Rubberex Corporation (M) Bhd lost 0.5 sen to 85.5 sen.
In a statement yesterday, Margma president KM Lee said most rubber glove manufacturers had started raising selling prices of their products to reflect the rising raw material costs and the weakening of the US dollar.
“If the orders forthcoming do not match the glove price requested, glove makers have no choice but to reduce the output,” said Lee.
Margma said the price of natural rubber latex had increased by about 19% from an average 657.25 sen/kg in January 2010 to a new record high of 782 sen/kg last Friday.
Meanwhile, the US dollar has weakened against the ringgit by around 13% compared to 12 months ago, it said.
Rubber futures contract in Shanghai hit an all-time high yesterday boosted by strong demand at a time of restricted supply in main producing countries. Concerns that rubber production in China will be affected by typhoons also lent support to the futures price.
The Shanghai rubber futures contract for March delivery hit a record 33,000 yuan (RM15,438) per tonne, up 3.8% from the previous high of 31,800 yuan per tonne marked on Oct 15.
Lee said despite the strong headwinds, the industry would remain bullish as demand for gloves was expected to grow at between 8% and 10% annually.
“We expect further growth in the industry on the back of rising healthcare awareness in emerging markets, especially in China, India and the Latin American countries.
“Comparatively, the healthcare expenditure in these regions is relatively low against what is being spent in the US, Europe and Japan,” said Lee.
Lee added that the domestic glove industry was to a large extent recession-proof and was relatively unscathed even during the recent economic downturn, mainly due to gloves being a necessity in the healthcare sector.
However, he pointed out that the glove industry was facing constant challenge with the ever-fluctuating raw material prices, particularly natural rubber latex for rubber gloves and crude oil for nitrile gloves.
The association also urged the government to be considerate in the removal of the natural gas subsidy by not overburdening an already challenging industry with a big and sudden gas price hike.
The removal of the subsidy for natural gas should be done over a period of time, it said.
The association has 46 members and 89 associate members. The ordinary membership is open to all bona fide rubber glove makers in Malaysia while others who directly involved in the trade or industry are eligible for associate membership.
This article appeared in The Edge Financial Daily, October 20, 2010.
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