“PHENOMENAL” demand for gloves is keeping the order books of Malaysian manufacturers full until next year, Malaysian Rubber Glove Manufacturers’ Association (Margma) president Denis Low told The Malaysian Insight.

The optimism remains even as a key player in the market – Top Glove Corp Bhd – finds itself slapped with a detention order, which is usually issued to prevent the importation of goods suspected of having been produced by forced labour.

Top Glove managing director Lee Kim Meow said a plan is set to lift the world’s largest glove producer from the American authorities’ list as soon as possible.

Malaysia supplied 186 billion pieces, or 64%, of the 296 billion global total supply of gloves in 2010.

The local glove industry exported 55 billion pieces of gloves in the first quarter of this year, which also happens to be the time when Covid-19 started spreading.

The numbers could see an upside of five to six billion pieces in the subsequent quarters, said Low.

“We are targeting to ship out 250 billion pieces this year as there is a chronic shortage of gloves in the world.”

The glove industry, the world’s largest supplier, is expected to ship between 220 and 250 billion pieces to 190 countries this year.

“We are expecting the world consumption of gloves to reach about 330 billion pieces, out of which, close to 67% will come from Malaysia,” Low said.

Lee said that the group’s order book stands at more than 100% and will keep it busy for 12 to 15 months. 

The group said even if its goods are denied entry into the US, it could still ship the products to other countries, where there is demand or repatriate back to Malaysia. 

MIDF Research said in a note recently that three out of four glove companies in its coverage reported better-than-expected earnings in the first quarter, thanks to increase in average selling price (ASP) of gloves and higher sales volume.

The Covid-19 outbreak worldwide and its incessant nature has led to higher demand for gloves, which resulted in upward revision in ASP, it said.

The surge in demand for gloves has resulted in demand outstripping supply and longer delivery lead times. 

Earnings are also helped by lower raw material prices and strengthening of the US dollar. 

Glove makers, such as Top Glove, Hartalega and Supermax, are expected to expand their production capacity, it said.

Top Glove Corp, the world’s largest manufacturer, is expected to grow its capacity by 36% – from 73.8 billion pieces in Q3 to 100.4 billion pieces in the last quarter. 

Hartalega Holdings Bhd will continue with its expansion plan whereby annual installed capacity is expected to increase from the current 38.1 billion pieces to 43.7 billion pieces by 2022. 

Kossan Rubber Industries Bhd has so far commissioned six production lines beginning January. 

Supermax Corp Bhd is expanding its production capacity with three plants under construction, which will increase its installed capacity by 12 billion pieces from 26.18 billion to 38.18 billion gloves by 2022.

The research house also expects margins to continue expanding due to continuous upward revision in ASP, strengthening of US dollar, and subdued raw material prices. 

Glove makers are expected to continue to revise the ASP higher due to the robust demand for gloves. 

They also benefit from a stronger dollar as gloves are priced in US dollars. 

“Meanwhile, prices of raw material such as nitrile-butadiene rubber (NBR) are expected to remain subdued due to the trade war tension.”

Prices of natural rubber latex have also been recently trending upwards due to the wintering season.  

However, MIDF is not overly concerned about the development as the increase in ASP is more than enough to offset the increase in raw material prices.

Bloomberg reported last month that the industry is seeing the emergence of new billionaires as net worth of glove tycoons saw a boost due to the boom in demand. – July 17, 2020.