The stronger ringgit and competition are set to keep a lid on ASPs, analysts said.
PETALING JAYA: Glovemakers will continue to make a profit despite analysts expecting them to have limited pricing power and Chinese rivals competing aggressively for market share in non-US markets.
Demand-supply fundamentals are also bearish to any upside in average selling prices (ASP) of gloves.
New production capacity in the Asean region is another headwind to face in the near future.
Nevertheless, some remain optimistic, the sector stocks are on a recovery path.
“The worst is behind them for local glovemakers. They have cut capacity and returned to profitability,” said Rakuten Trade equity sales head Vincent Lau.
“Which I think they can sustain for the immediate future, helped by exports to the US market despite tougher competition for non-US markets.”
He, however, warned that the stronger ringgit against the US dollar could pose some headwinds, as over 90% of glove manufacturers’ sales proceeds are denominated in dollars.
He is not alone in voicing this concern.
“We see potential downside risk to our earnings estimate, as our current base-case dollar-to-ringgit assumption for 2025/2026 stands at 4.15 to 4.20,” CIMB Research said in a report on the sector.
The strength in the local unit comes at a time when the industry has seen a shift toward cost-plus procurement models by major distributors that has further eroded any residual ASP negotiation advantage, leaving glove makers highly exposed to raw material and currency fluctuations, according to BIMB Research.
The high ringgit and stock levels among buyers appear to be hitting demand, with glove export volumes for October and November 2025 amounted to only 59% of third quarter of financial year 2025 (3Q25) export volumes, which ideally should be around 66%, CIMB Research said based on recent Statistics Department data.
The stronger ringgit and competition are set to keep a lid on ASPs, analysts said.
“We expect ASPs to remain flattish in 2026 owing to sustained predatory pricing by Chinese players in non-US markets, compounded by broader industry oversupply,” the research house noted.
“Customers remain highly price-sensitive and thus are more likely to switch to alternative manufacturers if faced with price hikes.”
The Statistics Department revealed that Malaysian glove export volumes fell 29% month-on-month to 38,987 tonnes in November 2025, marking the second-weakest monthly volume in 2025 after June.
BIMB Research stated global glove consumption has returned to pre-Covid-19 pandemic levels in unit terms, but revenue growth remains constrained by persistent ASP compression, ongoing oversupply and currency-related headwinds.
It added the rebound in profitability of local glove makers in the recent quarters has been margin driven, supported by lower raw material prices and proactive cost rationalisation efforts.
“We expect this trend to continue, where incremental gains are driven more by internal efficiencies than external pricing catalysts,” it stated.
A more optimistic CIMB Research expects the normalisation of input costs to begin benefitting glove makers in 4Q25, as the typical inventory drawdown period usually takes around two to three months.
It added that the normalisation of input costs would provide some relief to glove makers at least until 1Q26.
The oversupply situation is likely to persist till 2027 with the commissioning of new glove plants in South-East Asia by Chinese manufacturers.
The commissioning of the new capacity is expected to increase total global supply capacity by 30 to 50 billion pieces in 2026 (15% year-on-year) with industry players forecasting equilibrium to be reached by 2027.
Both CIMB Research and BIMB Research have maintained a “neutral” stance on the sector due to the challenging operating landscape.
CIMB Research’s top sector pick is Kossan Rubber Industries Bhd
, with a “hold” call and target price (TP) of RM1.15 a share, underpinned by its relatively high exposure to non-generic products and solid net cash position.
BIMB Research also has “hold” calls on Hartalega Holdings Bhd (TP: 94 sen), Top Glove Corp Bhd (TP: 72 sen) and Kossan (TP: RM1.19).
