KUALA LUMPUR, Sept 6 — The demand-supply situation in the rubber glove industry will only start to head towards equilibrium in 2025 when there is virtually no more new capacity coming onstream while the global demand for gloves continues to rise by 15 per cent per annum underpinned by rising hygiene awareness, Kenanga Research said.

Hence, the research house viewed the oversupply situation in the rubber glove industry to be less acute and gradually improve following signs of players cutting production capacity via decommissioning of selective plants.

It said the Malaysian Rubber Glove Manufacturers Association (MARGMA) projected 12 per cent to 15 per cent growth in the global demand for rubber gloves annually from 2023, following an estimated 19 per cent contraction to 399 billion pieces in 2022. It believes the supply-demand equilibrium may return in 6−9 months.

“However, we beg to differ, expecting the overcapacity situation to persist at least over the next 12 months. We project the demand for gloves to rise by 15 per cent in 2023, which is consistent with MARGMA’s forecast.


“This will result in an excess capacity of 112 billion pieces (instead of rising by four per cent or 116 billion pieces as previously forecast) which is similar to 2022,” it said in a note today.

Despite the improvement, the research house said that the overcapacity still persists which means low prices and depressed plant utilisation would continue to plague the industry in 2023.

For the 2023 forecast, it assumes an average selling price (ASP) per 1,000 pieces of US$20, translating to an estimated 10 per cent decline over 2022, and an average plant utilisation rate of 50 per cent versus an estimated 60 per cent in 2022 (US$1= RM4.67).


Meanwhile, Kenanga Research said the ASP of rubber glove is expected to be lower in the next two quarters following the sequential weakness in natural gas price.

It said since the natural gas price has declined sequentially in the second quarter of 2023, glove players are expected to pass on the cost savings to customers.

“Due to the current competitive pressure emanating from massive oversupply and low industry utilisation rate averaging at 40 per cent, customers can walk away and choose to buy from other players whenever there is an attempt to raise prices.

“Case in point, buyers can turn to Chinese manufacturers which are still selling below US$20 per 1,000 pieces at US$15-US$17 per 1,000 pieces,” it said.

It viewed that any attempt to raise ASP could cause a reduction in volume sales.

Kenanga Research has upgraded the glove sector to “neutral” from “underweight”, with negatives being priced in.

“While the glove industry might not be out of the woods, we believe the worst is over in terms of earnings downgrades,” it said. — Bernama