MALAYSIA: Malaysian rubber glove makers to hand off higher costs

Top Glove and Hartalega Holdings, two of the world's largest rubber glove manufacturers, intend to increase prices to offset the effects of an appreciating Malaysian currency and other burdens.

"The industry will pass on the discount when the ringgit weakens," Hartalega Managing Director Kuan Mun Leong told reporters. But when there is a reversal, he stressed,"we have to raise prices."

Kuan was speaking on the sidelines of Invest Malaysia 2016, a conference on capital markets also attended by Top Glove representatives.

Top Glove, too, said its "pass-through mechanism" will allow it to share higher expenses -- as well as savings -- with its customers.

Top Glove focuses on latex powdered gloves, which are commonly used in developing countries. Developed countries favor nitrile gloves -- Hartalega's forte.

Nitrile is a synthetic rubber that is more resilient than natural latex rubber. About 68% of glove demand comes from advanced economies like the U.S., Europe and Japan.

Natural latex prices are at an all-time low due to slowing demand from China. Still, the strengthening ringgit poses a challenge for exporters: The Malaysian currency has gained 6% against the dollar in the past month (March 2016) and recently touched 3.87 to the greenback.

As for nitrile, Kuan said about 95% of Hartalega's products are made of the material. "Historically," he said, "it's traded in U.S. dollars. So there is a natural hedge, since about 30-40% of our cost is nitrile rubber."

Source: Daily “Nikkei Asian Review”, Tokyo; 15 Apr 2016

(Syed Rashid Ali, Karachi, Pakistan)