The Week That Was - gloves, palm oil, Disney, trade,

The pandemic driven bumper profit for glove companies may have reached a peak after rising almost uninterrupted since March 2020.

Surging capacity

TWO of the country’s top glove producers Supermax Corp Bhd and Hartalega Holdings Bhd released their latest quarterly blockbuster earnings this week, with both companies adding RM1bil in net profit each.

But the pandemic driven bumper profit for glove companies may have reached a peak after rising almost uninterrupted since March 2020.

Supermax on Wednesday warned that spot prices are falling and the industry is facing a surge in capacity as players in Malaysia, Thailand and China invest heavily in new production lines.

Glove prices, it said, have declined by as much as 25% since March, as more countries worldwide rollout their Covid-19 vaccination programme.

Some analysts estimated that glove prices may have peaked at US$120 (RM495) per 1,000 pieces in March and could halved that by the end of the year.

CSG-CIMB Research this week have slashed its target prices for both companies by almost half, as they included a sustained drop in glove prices in their forecast for the coming quarters.

CGS-CIMB had assumed prices would start to drop in April, as a result of decline in overall market pricing, lower raw material prices, as well as increased global supply.

Record month for palm oil

THE average price of crude palm oil (CPO) surged to a record RM4,200 a tonne in April, driven the sharp increase in prices of competing edible oils.

Palm oil has attracted strong demand from international buyers due to the widening price discount against soybean oil of US$357 (RM1,472) per tonne versus historical five-year average of around US$122 per tonne.

Demand for palm oil in April was also boosted by stocking activities in key export markets, India and Pakistan ahead of the Eid festivities in mid-May.

However, worsening Covid-19 cases in India may curb export growth.

On the domestic front, palm oil production is projected to recover, but concerns remained that output would continue to be affected by the shortage of plantation workers amid the current strict border control.

Disney+ Hotstar is coming

THE Walt Disney Company subscription-based video-on-demand Disney+ Hotstar streaming service in Malaysia will be launched on June 1.

The subscription will cost RM54.90 for a three-month plan.

Subscribers of Astro Malaysia Holdings Bhd’s pay-TV service Movies Pack, however, will get Disney+ Hotstar at only RM5 a month, by virtue of Astro being appointed Disney+ Hotstar’s official distributor in this market.

Astro on Tuesday said its customers would be able to stream more than 800 films and 18,000 episodes of Disney’s content on the Disney+ Hotstar app.

Analysts said the latest development is positive for Astro, although it is still early to say how it will impact Astro’s future earnings.

Meanwhile, another potential beneficiary from Disney+ Hotstar entry into the local market is Media Prima Bhd.

According to CGSCIMB Research, much of the local content that will be added to the SVOD service’s library is produced by Media Prima’s Primeworks Studios.

The US trade gap at record high

THE US trade deficit jumped to a record high in March, the US Commerce Department said on Tuesday, as roaring domestic demand draws bigger imports, including from many Asian exporting countries.

Demand in the world’s biggest economy is being driven by a rapidly improving public health situation and massive government aid to households and businesses to cushion the blow from the Covid-19 pandemic.

The trade gap could widen further as the US economic activity rebounds faster than its global rivals.

This is good news for exporters including Malaysia.

In March, exports from Malaysia to the US expanded 67% compared with the same corresponding month last year. This strong export growth is helping to fuel the recovery in the country’s manufacturing sector.

On Monday, the headline IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) rose to 53.9 in April from 49.9 in March, indicating a solid improvement in the health of the manufacturing sector.