Nitrile gloves’ ASP to hit bottom in 3-6 months

KUCHING: The average selling price of (ASP) nitrile gloves should bottom in the next three to six months at between US$25 to US$30 level, analysts project.

AmInvestment Bank Bhd (AmInvestment Bank) believed that ASP should bottom soon, amid a slowdown in expansions and loss-making inefficient players.

“Firstly, major glove producers have slowed down their expansion in the past three months,” AmInvestment Bank explained in a glove sector update.

“Secondly, there is sign that inefficient players have started to make loss.

“For example, Blue Sail Medical have registered net loss of RMB22.9 million in the third quarter of 2021 (3Q21) which we believe is due to the decline in ASP for gloves.

“Note that Blue Sail Medical is a major China gloves producer with estimated five per cent market share of global medical gloves supply.”

Coupled with the scarcity of power supply in China as winter approach, the research firm expects less competition from China at current low level of ASP at below US$35 per 1,000 pieces of nitrile gloves.

Meanwhile, on environmental, social and governance (ESG), AmInvestment Bank gathered that there has been positive news in September but negative news in October and November.

“In September, Top Glove Corporation Bhd (Top Glove) has managed to improve its Social aspect among ESG factors. This has caused US Customs and Border Protection (USCBP) to modify its forced labour finding on the company.

“As a result, Top Glove Malaysia is allowed to export its disposable gloves to US after being banned for almost 14 months from July 15, 2020 to September 10, 2021.”

However, AmInvestment Bank recalled that in October, USCBP banned Supermax Corporation Bhd (Supermax) products.

“According to USCBP website, USCBP will detain disposable gloves produced by Supermax.”

The research firm gathered that USCBP has identified 10 out of 11 forced labor indicators while it was investigating the company.

“As a result, USCBP concluded that it has ample evidence to believe that Supermax and its subsidiaries produce gloves in violation of US trade law.”

AmInvestment Bank also noted that recently on November 4, USCBP has announced that “officers at all US ports of entry will detain disposable gloves produced in Malaysia by a group of companies collectively known as Smart Glove”.

The research firm highlighted that based on USCBP investigation, it has identified seven forced labour indicators.