US tariff hike for Chinese gloves bodes well for M'sian glove makers, but no immediate gains — Margma

TheEdge Wed, May 15, 2024 06:55pm - 4 days View Original

KUALA LUMPUR (May 15): While the tariff hike for Chinese-made gloves in the US presents an opportunity for Malaysian exporters to capture a larger share of the US market, the benefits are not expected to be immediate, as the import tariff hike only comes in 2026, according to the Malaysian Rubber Glove Manufacturers Association (Margma).

On Tuesday, US President Joe Biden announced a slew of tariff hikes for Chinese products, including rubber medical and surgical gloves. The import tariff would see Chinese-made rubber gloves slapped with a 25% rate by 2026, from 7.5% presently. 

“Though the news may bode well for Malaysian rubber glove players, we do not expect much immediate impact, as it will only take effect in 2026,” said Margma president Oon Kim Hung in a statement on Wednesday.

He pointed out about 35% of Malaysian rubber glove exports are for the US market, contributing approximately RM4 billion in 2023. 

Nonetheless, Oon pointed out that the glove manufacturing sector remains competitive, and that local players should continue to put emphasis on their environmental, social, and governance (ESG) efforts.

“We should not forget that the US also has its own domestic production. We believe that Malaysian glove producers should continue to invest in ESG matters to establish sustainable and equitable prices.”

Meanwhile, Top Glove Corp Bhd (KL:TOPGLOV), the world largest glove maker by capacity, anticipates that the tariff hike will lead US customers to seek alternative sources for rubber gloves outside of China.

“With the higher tariff on the import of gloves from China, the group pointed out that countries like Malaysia, Thailand, and Vietnam, which previously lost market share due to the extremely low pricing of Chinese manufacturers, will be the alternative source for US buyers,” Top Glove told The Edge when contacted. 

The group expects its US business to grow stronger going forward. Presently, the US is a major export market for Top Glove, accounting for 17% of its sales volume.

The announcement gave a boost to glover players on Bursa Malaysia, with Top Glove leading the rally. Top Glove hit the limit up just before the closing bell on Wednesday, surging 31.3% or 30 sen to RM1.26, its highest in two years. The counter was the most traded stock on Bursa, with trading volume jumping to an eight-month high of 506.89 million shares.

The stock surged 30 sen or 31.3% to a nearly two-year high of RM1.26, giving it a market capitalisation of RM10.34 billion.

On the other hand, Supermax Corp Bhd (KL:SUPERMX) was the third-most active stock on Bursa, with 325.31 million shares exchanging hands. Its share price gained 21.5 sen or 24.9% to RM1.08, the highest in two years.

Hartalega Holdings Bhd (KL:HARTA) and Kossan Rubber Industries Bhd (KL:KOSSAN) shares were also on the top active list, with Hartalega’s trading volume standing at 84.89 million shares, while Kossan saw 59.58 million shares done.

Hartalega’s share price jumped to a nearly two-year high of RM3.82, after surging 86 sen or 29.1%, while Kossan shares were up 36 sen or 15.1% to RM2.74, their highest since September 2021.

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eric leow
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So tmr all glove laosai?

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