PETALING JAYA: Analysts remain “neutral” on the outlook for the glove sector despite the United States officially imposing an additional 10% tariff on China’s goods, including rubber gloves.
Hong Leong Investment Bank (HLIB) Research said in a report that it viewed the additional tariffs to have limited impact on the sector.
“We believe the additional 10% tariff on China’s medical and surgical rubber gloves would not necessarily create another round of higher-than-expected tariff-led average selling prices for Malaysian glove makers, as seen in the fourth quarter of 2024 because US glove distributors had already re-established supply chains in Malaysia,” the research house added.
“This was unlike the time when US glove distributors rushed to re-establish the supply chain in Malaysia in mid-September 2024 to the end of the year, which allowed local glove makers to strengthen their bargaining power,” it said.
HLIB Research said the tariffs would not necessarily help Malaysian players to capture market share from China over the mid to long term.
Instead, the research house said China companies would shift from the US market to Europe and Asia, resulting in a simple shift in customer profiles between Malaysian and China manufacturers.
“However, when trade is diverted to Malaysia, we believe US distributors of medical rubber gloves are likely to prioritise reputable companies and established business relationships. Hence, we see Hartalega Holdings Bhd
and Kossan Rubber Industries Bhd as clear beneficiaries, given their listing status and having relatively higher exposure to US customers,” it added.
The research house maintained a “neutral” call on the sector, saying, “While we remain optimistic about the gradual improvement in conditions for glove manufacturers, we believe the recovery thesis for 2025 has already largely been priced in.”
