A further precipitous tariff hike and earlier implementation timeline announced by the US authority on China’s medical-grade gloves are poised to revitalise investors’ sentiment on the Malaysian glove sector.
With the sector’s post-pandemic recovery eclipsing earnings amid demand moderation, domestic glovemakers should progressively reclaim market share from China, sustaining concrete ASP trajectories and margin upticks. Maintain OVERWEIGHT.
US imposed higher tariff and earlier timeline on China medical-grade gloves in modifications of statutory review.
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The modified tariff action includes higher tariff of 50% in 2025 and 100% in 2026 (from current 7.5%; initially proposed 25% in 2026) on China’s rubber medical and surgical gloves’ exports into the US beginning next year.
To note, China had significantly raised its global market share from around 11% in 2019 to >30% in 2023. While China players predominantly produce PVC vinyl and nitrile gloves (>85% of total sales in 2023), we assess meaningful nitrile gloves demand flowing back to Malaysian manufacturers after the tariff hike is imposed.
Who is potentially the biggest winner in Malaysia? Capacity matters.
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Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
