Oversupply, Price Pressures Stall Glove Industry Recovery - PublicInvest
KUALA LUMPUR, June 6 (Bernama) -- The Malaysian glove sector remains under pressure as persistent oversupply, cautious customer sentiment, and pricing competition continue to weigh on recovery prospects.
In a research note released today, Public Investment Bank Bhd (PublicInvest) stated that the latest quarterly results from glove manufacturers under its coverage showed a sequential decline in sales volumes, primarily due to earlier front-loading activities by United States customers.
“We gather that customers remain cautious, with most adopting a wait-and-see stance, delaying sizeable purchases amid uncertainty from changes in tariff policy. In light of subdued demand visibility in the near term, we downgrade our sector call to ‘Neutral’ from ‘Overweight’,” said PublicInvest.
It also said that price competitiveness remains a key headwind. Although tariff adjustments have narrowed the average selling price (ASP) gap between China and Malaysia, China’s glove prices remain relatively uncompetitive in the US market.
Specifically, China's price is US$27 per 1,000 pieces, compared to Malaysia’s US$20 per 1,000 pieces, even factoring in an 80 per cent tariff.
“However, the recent invocation of emergency powers has prevented President Donald Trump from enacting broader tariff hikes. Assuming a more conservative scenario where China faces only a 10 per cent reciprocal tariff, China’s ASP will be at US$24/1k pcs, significantly closing the pricing gap with Malaysia,” it added.
The research house said that Chinese producers may absorb part of the tariff cost to defend market share, which would likely keep global ASPs subdued and limit near-term recovery for Malaysian glove makers.
“Despite losing market share in the US market, Chinese glove manufacturers are aggressively increasing market share in the non-US market, especially the European Union, pricing as low as between US$14 to US$15/1k pcs.
“China is currently expanding capacity outside of China in a bid to retain global competitiveness,” it added.
-- BERNAMA