Malaysian Rubber Glove Manufacturers Association (Margma) president Denis Low Jau Foo estimated glove prices could increase by as much as 9% to 12 % this time around depending on the glove type.
one of the key contributing factors was Hurricane Irma which had hammered the coastal areas of the United States.
“The devastation has caused the prices of butadiene, an important material in the production of nitrile latex to soar as its production has been severely affected. The increase in butadiene prices is expected to contribute to an increase in nitrile latex prices,” he said.
Low also said natural rubber latex prices have also been affected by speculation as the commodity is highly volatile.
“The International Tripartite Rubber Council, which is made up of the world’s top producers of natural rubber will be having its annual meeting later this month,” he said.
Low explained that prices of rubber tend to increase due to anticipation of price fixing and speculation.
“As manufacturers, we want natural rubber prices to be stable, and for farmers to be adequately compensated for their work, and not be subjected to unreasonable speculation and profiteering,” he said.
He pointed out that nitrile latex and natural rubber latex were major cost components in manufacturing rubber gloves.
“It is important that such hefty increases be properly monitored and managed, especially in the pricing for export of the gloves in the months ahead,” he said.
Margma is advising its members to revise their prices of gloves to better reflect the sharp rise in production cost.
It cautioned its members to limit the validity date to a shorter period so as not to get caught out in the unpredictability of rubber and butadiene prices.
Low said besides the rising cost of raw materials, another key factor affecting rubber glove prices was the weakening of the US dollar (from RM4.49 to RM4.21 to the US$).
He added the shortage of paper had pushed packing material prices up by 15%. The lack of readership of newspapers and magazine was causing the lack of feedstock to cupboard and cartons processing.
Low said demand for rubber gloves in Janauary to June of 2017 had been extremely encouraging as revenue increased by around 25% to RM8.1bil from RM6bil in the previous coresponding period. Volume rose 15.8% on the back of 8%-10% growth usually.
“We expect the second half of the year to be even better as Europe and America are buying very strongly with Asia leading the pack in terms of consumption. We understand from our members that most of them are in an oversold capacity position with some major players in oversold up to December,” said Low.