Latex prices continue upward climb

TheEdge Fri, Jan 13, 2017 09:41am - 7 years View Original


This article first appeared in The Edge Financial Daily, on January 13, 2017.

 

KUALA LUMPUR: Prices of centrifuged natural rubber latex have continued climbing upward to RM6.675 per kg yesterday, up 11 sen or 1.67% while market response was mixed on rubber glove counters.

Shares of Top Glove Corp Bhd saw an eight sen or 1.50% drop to RM5.27 while Hartalega Holdings Bhd saw a five sen or 1.04% fall to RM4.76.

Meanwhile, Kossan Rubber Industries Bhd traded higher by four sen at RM6.64 and Supermax Corp Bhd was up by two sen to RM2.16.

Karex Bhd, which makes condoms, rose four sen or 1.67% to RM2.43.

Newly-listed HLT Global Bhd, which specialises in glove-dipping lines, closed unchanged at 52 sen. The share has lost three sen since opening at 55 sen with a 22.2% premium on Jan 10.

The monthly rubber statistics for Malaysia, which were released yesterday, showed an increase in natural rubber production by 6% in November 2016. The average price of latex concentrate increased 10.4% or 50.75 sen per kg month-on-month, the statistics showed.

Over the past one year, latex price has doubled from RM3.26 per kg.

An approximate 10% loss in supply is expected for overall rubber output this year, Chao Songarvut, deputy governor of the Rubber Authority of Thailand, told Reuters.

Unseasonal flooding had affected the country’s main growing region leading to the output loss.

Thailand is the world’s biggest grower and exporter of rubber, producing about 4.46 million tonnes of rubber in 2015.

In a sector update yesterday, Maybank Investment Bank Research said it still expected some near-term earnings growth supported by a hike in the average selling price of gloves.

“The higher US dollar to ringgit rate in the fourth quarter of 2016 could cushion the cost inflation, resulting in marginally positive operational earnings growth in 4QFY16 [fourth quarter of financial year 2016],” analyst Lee Yen Ling said.

The research house maintained a “neutral call” on the gloves sector, adding that the growth in sales volume across the industry had remained positive on global demand growth of 5%-6% per annum.

Meanwhile, TA Securities Holdings Bhd analyst Wilson Loo said the sector would receive a “short-term reprieve” from the government’s decision to postpone the implementation of the foreign workers’ levy to 2018.

“The grace period presents employers with room to deliberate on the anticipated challenges ahead in 2018,” Loo said.

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