Rubber glove industry turnaround with new U.S. tariff on China 2024

The Malaysian rubber glove industry is poised for a turnaround as the US plans to increase tariffs on Chinese products, including medical gloves, boosting export costs for Chinese manufacturers.

With the competitive edge of Chinese gloves eroding, the US is expected to refocus on market players like Thailand and Malaysia. Consequently, Malaysia, renowned for its glove production globally, is anticipated to witness a recovery in orders and market share in 2026.

According to the World Integrated Trade Solution (WITS), Malaysia leads glove exports with a trade value of USD 1.86 billion, with significant exports to 190 countries, including a notable 19% to the US. Meanwhile, China ranks second with a trade value of USD 1.13 billion. Malaysia’s success is attributed to its production of high-quality and sustainable products, particularly amidst concerns over the quality of Chinese gloves leading to restrictions and FDA import alerts.

Rubber glove tariff?

The tariff hike is expected to narrow the price gap between gloves from different countries, potentially normalizing the oversupply situation in the industry by 2025 as purchaser inventory levels deplete. This scenario favors purchasers planning restocking activities in 2025 or 2026.

The lifting of import bans on Top Glove Corp Bhd and Supermax Corp Bhd by the US FDA, following the resolution of forced labor concerns, underscores the industry’s commitment to sustainable practices in the ESG space. Moving forward, glove players will continue to prioritize cost optimization strategies, including the decommissioning of inefficient plants and reducing wastage.

Favoring Hartalega and Top Glove, industry analysts anticipate Malaysian glove makers to raise their average selling prices (ASP) due to industry-wide increases in raw material costs, leading to improved margins. Hartalega’s significant exposure in the US market reinforces this preference. However, the positive impact is expected to materialize in 2026.

Recommendations are upgraded to HOLD for HARTA with a fair value of RM3.90, reflecting higher BV multiples and margin expectations for FY25F. Meanwhile, a HOLD call is reiterated for TOPGLOV, with a fair value of RM1.24, pegging higher PE multiples.