KUALA LUMPUR (Dec 4): Hong Leong IB Research (HLIB) has maintained its “Neutral” rating on the rubber products sector and said nitrile prices move in correlation with the price of their main feedstock, butadiene (correlation: 0.87), which in turn follows the footsteps of crude oil prices (correlation: 0.82).

In a note Thursday, the research house said weakening crude oil price will result in lower butadiene prices leading to lower nitrile prices.

It said Findings from sensitivity analysis show that the main beneficiaries are Kossan Rubber Industries Bhd, followed by Top Glove Cirporation Bhd and Hartalega Holdings Bhd.

“This may be contradictory to general view which expects Hartalega to top the list. The contrasting result is due to less amount of nitrile used by Hartalega, the manufacturer of the lightest nitrile gloves, weighing a mere 3.7g.

“We learnt that these cost savings have to be passed back to customers, same case with latex. Nevertheless, it will provide a cushion to absorb other rising costs.

“All in all, we believe there is limited impact in this scenario. Maintain “Neutral” on the sector,” it said.