KUCHING: The outlook for the glove sector remains encouraging as demand for rubber gloves is expected to be sustained this year.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) in a report yesterday said demand for rubber gloves remain strong as the export value of rubber gloves posted a double-digit gain of 18.2 per cent year-on-year (y-o-y) to RM916 million last February.
The research firm observed overseas customers placed higher orders of thinner specification of rubber gloves in recent times.
It also observed that in 2014, Malaysia’s exports of rubber gloves increased by 7.1 per cent y-o-y to 95.4 billion pieces of gloves.
MIDF Research noted that out of the 95.4 billion pieces, 50.4 per cent consisted of natural rubber gloves and 49.6 per cent consisted of nitrile rubber gloves.
Additionally, MIDF Research believed the improving rubber price will enable glove manufacturers to increase their average selling prices (ASP) of gloves thus, increasing the revenue for rubber glove makers.
Furthermore, the research firm expects raw material prices for gloves to increase slightly in the near term due to restricted supply of rubber from Thailand, increasing demand of rubber from China and rebound in crude oil prices.
As a result of the fall in crude oil price last year, MIDF Research pointed out nitrile rubber prices have also declined as the main constituent in nitrile rubber composition was derived from petroleum.
It noted ASP for nitrile gloves had also experienced a dip previously as customers request for lower glove prices.
With the expectation of improving crude oil prices going forward, MIDF Research expects the price of nitrile rubber to improve, thus increasing the ASP for nitrile rubber gloves.
Hence, MIDF Research is still sanguine on the prospects of the local glove industry.