CIMB Securities Expects Chinese Glove Makers To Shift Production To ASEAN Region Upon Revised US Tariff

KUALA LUMPUR, Aug 1 (Bernama) -- CIMB Securities Sdn Bhd expects the revised United States tariff rates for glove-producing countries will prompt Chinese glove makers to shift production to the ASEAN region, particularly Indonesia.

For example, Chinese glove maker INTCO Medical aims to start its first 5.0 billion pieces-per-year glove plant in Indonesia by the end of this year and plans for further expansion.

 CIMB Securities believes that this is a potential game-changer in the region, which may increase pricing pressure for Malaysian glove players in the long run, especially in the price-sensitive US market.

“We maintain a ‘Neutral’ stance on the rubber glove sector due to several ongoing challenges. These include a slow recovery in demand, as buyers are cautious in their purchasing patterns, high production costs, and declining average selling prices (ASPs) in a market that is oversupplied, particularly with increased capacity from Indonesia,” it said in a note today.

While Malaysia no longer holds a rate advantage over Thailand, Indonesia, or Cambodia, CIMB Securities said its 19 per cent tariff is still lower than Vietnam’s (20 per cent) and China’s (30 per cent), offering marginal competitiveness in the US market.

“We expect some incremental shift in US glove orders to Malaysia, but higher tariffs will still increase US buyers’ cost base, which may limit restocking or lead to leaner inventories,” it said.

The US has finalised a 19 per cent tariff on Malaysian glove imports, effective seven days after the announcement today. This is a downward revision from the previously announced 25 per cent (July 7) and 24 per cent (April 9) rates.

-- BERNAMA