Gloves supply to hit 420bil pieces in 2021

KUALA LUMPUR: The Malaysian Rubber Glove Manufacturing Association (Margma) estimates global disposable glove supply to increase 22 per cent to 420 billion pieces in 2021, Hong Leong Investment Bank Bhd (HLIB) said.

HLIB said in a meeting with Margma recently, the association had shared that the figure was based on data from their members in Malaysia, new entrants into the market, information from Argma (Asean rubber glove manufacturing association), as well as tracking capacity expansion in other countries.

Margma remains sceptical of the mooted 85 billion to 100 billion pieces increase in production capacity from China by 2023.

Furthermore, HLIB said Margma reckoned even if rapid capacity expansion in China materialises, the increased supply would likely be moped up by the domestic China market from heightened hygiene awareness from the Covid-19 outbreak.

“We note that pre-pandemic (2019), China’s annual glove use per capita of just six pieces far lags behind its developed market peers (150/100 pieces in US/EU per capita),” it said.

HLIB said Margma had expected average selling price (ASP) to be 40 per cent to 60 per cent higher than pre-pandemic levels.

“In the post pandemic landscape, Margma expects it to result in a new normal, resulting in increased hygiene awareness around the world and higher glove use in general.

“Margma compared Covid-19 to the AIDS epidemic in the 1980s when glove adoption accelerated, particularly by healthcare workers in order to avoid direct contact with open wounds,” it said.

Meanwhile, Margma believes that there has yet to be a single new glove producer in Malaysia that has begun production despite the pandemic lasting for over a year.

“While we understand a number of new Malaysian entrants are expected to begin production from May 2021 onwards, Margma shared that receiving various certifications will take one to two months and can only happen after production begins.

“While it may still take a few more months for newer entrants to start selling, Margma estimate that new Malaysian entrants will add between 6.5 billion and 10 billion pieces of production capacity per annum this year,” it said.

HLIB has maintained its “overweight” call on the sector, with Top Glove Corporation Bhd being its top pick.

“Despite recent correction in prices, we expect the resurging Covid-19 cases globally (since mid-February) to provide support for sales demand in the short term,” it said.

Source: NST