HURRICANE IRMA CAUSES NITRILE LATEX PRICES TO SOAR
AMP NBC news
Rubber glove prices may increase by 9% to 12%, says MARGMA
September 12, 2017 13:34 pm MYT
KUALA LUMPUR (Sept 12): The price of rubber gloves is expected to increase in the next few days due to a number of contributing factors, according to Malaysian Rubber Glove Manufacturers Association (MARGMA).
In a statement today, MARGMA president Denis Low Jau Foo said one of the key contributing factors is Hurricane Irma which is currently wreaking havoc in the coastal areas of the United States.
He said the devastation has caused the prices of Butadiene, an important material in the production of Nitrile Latex, to soar as its production has been severely affected.
Low added the increase in Butadiene prices is expected to contribute to an increase in Nitrile Latex prices.
He said besides the rising cost of Nitrile Latex, Natural Rubber Latex prices had also been affected by speculation, as the commodity is highly volatile.
“The International Tripartite Rubber Council, which is made up of the world’s top producers of natural rubber, will be having its annual meeting later this month.
“Usually when this happens, prices of rubber tend to increase, due to anticipation of price fixing and speculation. As manufacturers, we want natural rubber prices to be stable, and for farmers to be adequately compensated for their work, and not be subjected to unreasonable speculation and profiteering,” Low said.
Low explained that as Nitrile Latex and Natural Rubber Latex are major cost components in manufacturing rubber gloves, it was important that such hefty increases be properly monitored and managed, especially in the pricing for export of the gloves in months ahead.
MARGMA also advised its members to revise their prices of gloves to better reflect the sharp rise in production cost.
It also cautioned its members to limit the validity date to a shorter period, so as not to get caught out in the unpredictability of rubber and butadiene prices.
According to Low, besides the rising cost of raw materials, another key factor affecting rubber glove prices is the weakening of the U.S. dollar (from RM4.49 to RM4.21 to the US$).
“As such, an exchange rate means less ringgit to the manufacturer, it is inevitable that prices must be constantly readjusted to reflect the weakening status of the US dollar.
“Another cost component that has a runaway effect on the industry is the shortage of paper. This shortage has pushed packing material prices up by 15% already and it looks like [it's] moving up again. The lack of readership of newspapers and magazine is causing the lack of feedstock to cupboard and cartons processing,” Low said.
Therefore, prices of gloves must surely move up, as increases in cost would be impossible for the manufacturers to bear on their own, he added.
He said MARGMA estimates glove prices could increase by as much as 9% to 12% this time around, depending on the glove type.
Commenting on the industry’s performance, Low said demand for rubber gloves in the first 6 months of 2017 have been extremely encouraging, with revenue soaring by around 25% to RM8.1 billion, from RM6.0 billion in the previous six months.
He said volume had also increased significantly by 15.8%, usually on the back of 8%-10% growth.
“We expect the second half of the year to be even better, as Europe and America are buying very strongly with Asia leading the pack in terms of consumption.
“We understand from our members that most of them are in an oversold capacity position, with some major players in oversold up to December,” Low said.