PETALING JAYA: The Malaysian Rubber Glove Manufacturers Association (Margma) has projected rubber glove export revenue to come in at RM38 billion in 2021 amid the rollout of the Covid-19 vaccine, up 7.8% from RM35.26 billion in 2020, driven by enhanced awareness and cautiousness in the new normal that will sustain the current elevated demand.
This is a remarkably slower pace compared with the 103% year-on-year jump last year, which skyrocketed from RM17.35 billion in 2019 due to the outbreak of the pandemic.
Margma president Dr Supramaniam Shanmugam (pix) said the estimated oversold quantity in Malaysia as at January 2021 is 160 billion gloves, equivalent to seven (6.86) months of production capacity, an improvement from 10-12 months in first-quarter 2020 (Q1’20) and Q2’20 at the height of the pandemic.
This long lead time situation is expected to persist until year-end.
“Before Covid-19, the demand has always been growing 8-10% and in some instances 12%. The Covid-19 brought about a tremendous demand situation. Post-Covid, we think that the demand will still be growing much more than the pre-Covid scenario. The situation looks robust for the glove industry. We hope we continue with our annual growth of 15%,“ he said in an online media briefing on Monday on the industry update and outlook for 2021.
Margma has estimated the global supply to be at 420 billion gloves in 2021, equivalent to 13,318 gloves used every second. Of this, Malaysia is estimated to produce 280 billion gloves (67%), followed by Thailand (18%), China (10%) and Indonesia (3%).
With global demand outstripping global supply, Malaysia’s top five export markets in 2020 were the US (33.7%), Germany (6%), the UK (6%), Japan (5.7%) and China (4.5%).
“Demand is expected to continue to be strong until Q2’22. Manufacturers are working hard to expand and produce enough gloves to meet demand.
“Manufacturers will also continue to enhance and improve their social compliance standards in order to stay in the competition, with innovation, automation and aggressive R&D to maintain pole position,” said Supramaniam.
Margma immediate past president Denis Low opined that global supply for 2021 will be closer to 390 billion to 400 billion gloves instead of 420 billion gloves.
“Going forward until 2023, the shortage is going to be there. Governments are the major buyers and average selling prices will not fall because governments stock up in big numbers and all the major producers have big government contracts which they find difficult to fulfill as well.”
He added that amid the oversold situation, there will still be orders coming in every other day, pushing the oversold situation to a higher level.
“This is the glove industry. The solid fundamentals are there and the share price is grossly undervalued.”
Low said that while glove companies are able to accelerate production, the rest of the supply chain, including raw material and component suppliers must also work in tandem with the glove makers.
