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Thursday, October 23, 2014

No big rise in glove demand


ETALING JAYA: Despite news that the Ebola virus has spread beyond western Africa to Europe and the United States, Malaysian glovemakers say they have yet to see demand for their rubber gloves pick up like it did during the avian flu and SARS outbreaks of recent years.
Top Glove Corp Bhd executive director Lim Cheong Guan told StarBiz in an email reply that the impact on sales from the virus had not been substantial as Africa as a whole only accounted for 4% of total sales. He pointed out that, on average, global demand for rubber gloves grew 5% to 6% yearly.
The Malaysian Rubber Glove Manufacturers Association estimated in July that demand for rubber gloves this year would increase by 8% to 178.6 billion pieces. Malaysia supplies two-thirds of global production.
However, Lim pointed out that the Ebola outbreak has certainly increased awareness of the importance of “personal protective equipment” such as gloves and this augurs well for the industry.
Affin Hwang Research analyst Kristine Wong said a rise in demand could happen if the Ebola virus were to spread and become a global pandemic. She added that despite the marginal increase in demand, the contribution to total volume has been significant due to the large base.
AllianceDBS Research analyst Ian Wan said in an Aug 11 report that Malaysian glovemakers could see a 25% to 30% upside in their share price should the Ebola virus become a global pandemic. He said this was based on the share price movement of glovemakers during the avian flu pandemic in 2009.
Although demand has not risen due to the Ebola virus, Wong nevertheless expects local glovemakers to experience a stronger second half compared to the first half. Lim, who also expects healthy sales in the second half, said the first half of 2014 was weaker due to various holidays and festive seasons.
Other factors that could help local glovemakers would be lower latex prices, which would cushion them from the higher production costs following the hike in natural gas tariffs for industrial users effective last April as well as the strengthening US dollar as sales is priced in that currency.

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