This article first appeared in The Edge Financial Daily, on April 22, 2016.

KUALA LUMPUR: Rubber glove prices, which have increased since early this month, are expected to rise further on costlier raw materials and as Malaysian manufacturers contend with a stronger ringgit.

Malaysian Rubber Glove Manufacturers Association (Margma) said in a statement yesterday that the industry has also taken into account the impact of the anticipated rise in minimum wage and the natural gas price.

“Prices of rubber gloves are expected to rise further on the back of a continuous rise in the costs of production inputs, including natural rubber latex and nitrile latex, which are the two main ingredients in glove making.

“Adding to the cost of raw material rises, the weakening of the US dollar against our ringgit also means that glove manufacturers will be getting less ringgit for their exports,” Margma said.

According to the association, the natural rubber latex price has increased to an average of RM4.55 a kilogramme (kg) now, from RM3.55 a kg in February this year.

Meanwhile, the price of synthetic rubber or nitrile latex has risen to the current average of US$1,020 a tonne (RM3,957.6), from US$960 a tonne in February.

Margma also noted that the ringgit has strengthened to about 3.88 against the US dollar now, from a high of 4.58 last year.

“Thus, it is absolutely necessary for glove manufacturers to increase their prices in order to pay for the increased production costs.

“The exchange rate has a direct bearing on profitability and this situation is very closely monitored by all manufacturers and if need be, prices will be adjusted every two weeks instead of the usual monthly pricing regime of the industry during this fluctuating business environment,” Margma said.

As the industry has anticipated these additional costs, prices for delivery in the forward months will be adjusted accordingly, it said, adding that all costs will be passed down to the buyers usually.

However, the association emphasises that its members are well poised to weather these increases and believes that the industry is able to navigate this slight turbulence.

“Our prices still remain competitive as the rise in the cost of raw material is universal while our advanced technology production lines are very cost efficient,” it said.

Last year, the rubber glove industry recorded a RM13.1 billion export revenue in 2015, a 22% increase from RM10.71 billion in 2014.

Nonetheless, the news on the price hike did not lend support to the glove makers’ share prices which have been on the downtrend in the past few months. The world’s largest rubber glove manufacturer, Top Glove Corp Bhd fell eight sen or 1.56% to RM5.05. Year to date (YTD), the stock has fallen 25.5%.

Although its peers such as Supermax Corp Bhd and Kossan Rubber Industries Bhd rose marginally by one and two sen respectively to RM2.80 and RM6.35 yesterday, both counters had depreciated 13.58% and 31.72% since the beginning of this year.

Hartalega Holdings Bhd, which was unchanged at RM4.59 yesterday, has also shed 22.7% YTD.