US tariffs on China’s medical gloves unlikely to benefit Malaysian players
04 Feb 2025
The additional tariff on China’s medical and surgical gloves is unlikely to significantly boost Malaysian players’ ability to capture global market share from Chinese players, HLIB Research said.
In the medium to long term, the firm said Chinese players will instead shift their focus to Europe and Asia from the US market (merely a shift in customer profile between Malaysian and Chinese players).
“However, when trade is diverted to Malaysia, we believe US medical rubber glove distributors are likely to prioritise reputable companies, particularly the listed Big 4 and established business relationships with proven track records and it could take at least three months of qualification procedures for a new business relationship.
“Hence, we see Hartalega Holdings Bhd and Kossan Rubber Industries Bhd as clear beneficiaries, given their listing status and having relatively higher exposure to US customers,” it said.
In the short term, HLIB Research said the tariff is unlikely to create another round of higher-than-expected tariff-led in the average selling price (ASP) in US dollars for Malaysian glove makers, as seen in the fourth quarter of 2024 (4Q24).
“This is because US glove distributors have already re-established their supply chains in Malaysia, unlike in mid-September 2024 to 4Q24, where US glove distributors rushed to re-establish supply chains in Malaysia, which has allowed local glove makers to strengthen their bargaining power.
“For perspective, assuming all Chinese medical rubber gloves were diverted to Malaysia, tariff-related shifts could only result in an incremental glove demand of 22 to 28 billion pieces per year.
“This would just account for seven to nine per cent of Malaysia’s total supply in 2025, which only represents a four per cent rise from the 2024 level,” it added.
The firm maintained its “Neutral” outlook on the gloves sector.
Source: NST
