Tuesday, September 28

Margma expects natural gas and electricity rates to come down

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Malaysia’s rubber glove industry continues to be besieged by rising costs due to higher wages, an increased in natural gas prices over the months, a not-so-conducive electricity tariff for businesses and the highly competitive global business environment.

KUCHING: The Malaysian Rubber Glove Manufacturers Association (Margma) expects a substantial drop in natural gas price due to the sharp fall in the prices of liquefied natural gas (LNG) and coal in recent months.

In making this call to Gas Malaysia Bhd and Tenaga National Bhd to quickly take a look at current cost factors and to revise the tariff to be in line with the international prices of LNG and coal, Margma is also seeking the Energy Commission to assist in moderating energy costs so as to make the rubber glove industry to be more competitive in light of the stronger competition from foreign competitors.

“It is obviously natural that the cost of manufacturing ought to come down in tandem with the sharp drop in prices of these two important sources of energy.

“The reduction in energy costs will definitely be a booster to rubber glove manufacturers who are now saddled with a rather high natural gas cost and the higher tariff of electricity usage for businesses,” said Margma president Denis Low in a statement yesterday.

“The Asian LNG pricing, using Japan Korea futures was at US$11.81 per MMBtu in September 2018, which was at its highest, and comparing them to current futures, it is only at US$4.62 per MMBtu — a differential of about 60 per cent.

“The price of coal has also dropped by almost 25 per cent. It was about US$118 per tonne as of July 2018 and now, it is about US$88.25 per tonne, a drop of about 25 per cent.”

Low noted that the rubber glove industry continues to be besieged by rising costs due to higher wages, an increased in natural gas prices over the months, a-not-so-conducive electricity tariff for businesses and the highly competitive global business environment.

“While most of our member companies are seasoned players and very matured, it is still a challenge too much for them and as such, it would be wise and clever for the Energy Commission to quickly step in to ensure that Malaysia continue to be the global leader in the supply of medical examination and surgical gloves to the world.”

On thos point, the asociation expects global demand to be buying up to 300 billion pieces of rubber gloves this year and that they hope to garner 65 per cent of market demand. At the moment, Malaysia exports to more than 190 countries across the globe.

“In 2018, Margma member companies exported an estimated 168.8 billion pieces of rubber gloves to the World with a value of about RM17.74 billion. We are targeting RM19.88 billion export this year,” Low said.

“MargmaA is ever hopeful and we know that our Government will react very quickly to assuage our costs and competitiveness and to sustain Malaysia’s global leadership in this field.

“We are also hopeful that the foreign workers issue will be resolved upon a high-powered meeting with the Minister of Primary Industries Minister Teresa Kok last week and together, we shall be engaging Minister of Home Affairs Tan Sri Muhyiddin Yassin and Minister of Human Resources M Kulasegaran for a winning solution.”