KUALA LUMPUR: The current decline in average selling prices (ASPs) of gloves has slowed down and will not continue unabated, and the percentage of the decrease following the country's transition to the endemic phase has become smaller.
Malaysian Rubber Glove Manufacturers Association (Margma) president Dr Supramaniam Shanmugan said ASPs decline would not continue unabated. The decline has slowed down.
"The rubber glove industry is a very mature industry, and there are many level-headed stakeholders who must let common sense prevail," he said.
He said there needed to be efforts from both the demand and supply sides of the industry to address the issue with the current glove prices.
"There is a rising cost factor to consider, and as such, it will be in the interest of both the supply and demand sides to come up with an equitable solution to rectify the current unwarranted glove prices," he said.
Supramaniam said that a survey by the association revealed that glove prices have bottomed out and will return to their pre-pandemic level.
This is necessary to maintain a "meaningful and sustainable" equilibrium in the supply and demand dynamics.
"Prices will certainly adjust to their normal position as seen before the pandemic.
"We understand that stocks are beginning to dwindle, and soon enough, the normal buying pattern will return in the next 3 to 6 months, if not more shortly.
"In the interim, capacity expansion has been put on hold," he said.
He added that capacity utilisation had been adjusted slightly downwards to cater for the scenario.
Meanwhile, Rakuten Trade Sdn Bhd vice president of equity research Thong Pak Leng said ASPs had gone below the pre-pandemic level.
At the current juncture, he noted the prices are showing no signs of a rebound.
"ASPs went below pre-pandemic level, and for now, there are no signs of recovery for the prices," he said.
Among the risks threatening the position of the local glove industry and the dwindling prices are new entrants from China.
Thong noted that Chinese glove companies are swiftly adopting new technologies that are on par with Malaysia.
"The biggest threat to our glove industry is the new entrants in China. They are very quick in catching up with our technology," he said.
Rubber glove companies in the country are taking a hard fall following high earnings recorded during the pandemic's peak.
Among affected players is Top Glove Corporation Bhd, which closed its final quarter for its financial year ended August 31, 2022, with a net loss of RM52.59 million, compared to a net profit of RM447.4 million a year ago.
Its managing director Lim Cheong Guan previously said that the glove industry has been facing strong headwinds over the last year.
He said the temporary oversupply situation and weaker demand had distorted the demand and supply mechanisms, and the company's fourth quarter (Q4) FY22 performance is not reflective of the business or the sector's true potential, both of which remain very promising in the long term.
Despite the oversupply situation, Top Glove remains confident that once customers' stockpiles are depleted, and glove restocking activity resumes, the market will stabilise and be better positioned to absorb the additional supply from new capacity.
As the glove industry is estimated to be running at below 50 per cent utilisation, glove supply is expected to reduce accordingly.
Rubberex Corporation Bhd managing director Khoo Chin Leng said that as global vaccination rates improve over time and the usage of gloves becomes more mainstream, over-supply and declining ASPs are inevitable.
"While lower capacity utilisation and sales volumes were seen from our nitrile disposable glove division, demand for the company's other products, specifically our general-purpose and industrial gloves, remained stable and profitable," he was quoted as saying.
Other players, such as Hartalega Holdings Bhd and Supermax Corporation Bhd, were also not spared from the decline in ASPs, as shown in their plunging share prices compared to their peaks in 2020.