KUALA LUMPUR (Jan 17): The Malaysian Rubber Glove Manufacturers Association (Margma) is positive on seeing annual growth in demand of about 8% to 10% for gloves and is forecasting higher revenue for glove players due to higher selling prices.

According to Margma, natural rubber latex average price has risen from RM4.56 per wet kilo in September to about RM6.59 per wet kilo in January 2017 (up to Jan 15). It stood at RM7.15 per kilo as of today, representing a serious and sharp rise of about 45% from September to January.

Margma president Denis Low Jau Foo said in a statement today that incessant heavy rains and flooding in some areas have badly affected natural rubber products. He also added that with the limited stock of raw materials coupled with the flooding, it is only a matter of time before shortages will be severely felt and if prolonged, may cause natural rubber prices to rise further.

The association also calculated that glove prices should have risen by US$1 to US$1.50 per 1,000 pieces from September to end of last year. From January 2017, there should be another increase of US$1.50 to US$2 per 1,000 pieces in tandem with the sharp rise in the cost of natural rubber latex.

Similarly, a sharp and significant rise in the cost of butadiene is seen.

Butadiene is the main ingredient or monomer used in the production of nitrile latex. While it was quoted at US$950 per tonne last September, it has risen to US$2,500 per tonne in early January 2017 and was quoted at US$2,870 per tonne on Jan 16.

A press release by Margma said that the shortage of Butadiene is reported due to closure of several plants. It added that the pickup in China's motor car industry also contributed to the huge demand versus the less-than-usual production of butadiene.

This has contributed to the increase in the average selling price of nitrile latex, which stood at US$946 per tonne last September and has moved up to US$1,140 per tonne in the beginning of this year and is likely to move up by as much as US$250 to US$350 per wet tonne for February delivery.

"As the cost increases are very volatile and sharp, Margma believe that its members have increased selling prices by US$1 to US$1.50 from September to December 2016. From January 2017 onwards higher raw material prices need to be costed onto the nitrile glove prices by about US$2.50 to US$3.50," it said.

Margma also advised its members in the statement to revise their prices of gloves to better reflect the sharp rise in production costs and cautioned its members to limit the validity date to a shorter period so as not to get caught out in the almost daily rise of rubber and butadiene prices.