PETALING JAYA: Glove stocks will continue to face renewed phases of volatility amid the ongoing global conflict, despite attracting some interest in the past weeks.
Supply chain shocks coupled with the prolonged issue of structural oversupply will keep the sector under the radar for now, even if there had been a two-week truce called on the Middle East war.
“While the two-week pause gives brief relief from the acute threat of raw material shortages, we continue to see sector risk-rewards tilted to the downside,” RHB Research analysts told clients in a report yesterday.
It emphasised that recent geopolitical developments, including the temporary Middle East conflict ceasefire, were transitory and do not alter the underlying fundamental issue of structural oversupply.
Another analyst told StarBiz that for now, glove companies will more or less stay under the radar with interest driven more by short-term trading rather than an actual sustainable fundamental re-rating.
“Despite occasional rebounds, sentiment on the glove boys will remain subdued,” he added.
To be sure, supply chain shocks which have resulted in significant increases in glove raw material prices have already forced some players out of the industry.
It was recently reported that rubber glove maker WRP Asia Pacific Sdn Bhd will begin winding down its operations this month, as a result of “severe disruptions across global energy and petrochemical supply chains” caused by the Middle East war.
Raw material prices have indeed increased with reports indicating that nitrile feedstock prices have risen between 23% and 44%, while latex prices have gone up by up to 15%.
More notably, upstream petrochemical inputs such as butadiene – which is a key component of nitrile butadiene rubber (NBR) – have jumped by as much as 70%, causing overall production costs to go up by more than 50%. Analysts said over the near term, a further rise in NBR prices cannot be ruled out, especially if geopolitical issues continue to persist.
Rakuten Trade Sdn Bhd head of equity sales Vincent Lau said: “In a way, the increase in raw materials is also a blessing in disguise for the bigger listed glove companies like Top Glove Corp Bhd
and Hartalega Holdings Bhd.
“Smaller outfits are beginning to exit, if not already, bringing the overall industry volume lower and lifting average selling prices (ASPs).
“With the ongoing conflict in the Middle East, I do think raw material prices will stay elevated for some time,” he added.
Another analyst further noted that rising costs are expected to remain a defining theme for a while, and hence, cause earnings pressure, but they could also likely push for a long-needed consolidation of the industry.
Malacca Securities Sdn Bhd head of research Loui Low said although the Big Four glove stocks – Top Glove, Hartalega, Kossan Rubber Industries Bhd and Supermax Corp Bhd – were “finally getting some love again after getting absolutely hammered since 2025...it’s not all clean sailing”.
He wrote in a post on a professional networking site that the Middle East situation “is a genuine headache”.
“If the Strait of Hormuz gets disrupted, freight costs spike and NBR, the key raw material for nitrile gloves, gets squeezed.
“The companies are pushing ASPs higher to compensate, but it’s something to keep an eye on. After hovering around RM3.80 to RM3.95, the ringgit has now broken the RM4/US dollar level, which is a nice feel-good moment for the sector,” Low further stated.
At press time yesterday, most glove stocks were down with Top Glove and Hartalega shedding four sen and six sen each to 76.5 sen and RM1.19 respectively.
