With China players increasingly deploying overseas capacity to penetrate the US market more effectively, the competitive landscape is turning more aggressive, especially after 2025. In our view, a price war is highly likely shaping up an over-supplied gloves market.
Separately, we believe upcoming results could be weak mainly due to weakening US$ currency vs MYR.
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New capacity coming onstream sooner than expected
Latest industry sources suggest that competition in the glove sector is set to intensify further, with new capacity from a major China glove maker, expected to come online by end-2025. We understand that the China glove maker has started marketing to US customers, offering upcoming capacity from its overseas plants in Vietnam and Indonesia at ASPs of US$16–17/k pcs (vs. Malaysia glove makers’ current ASP of US$18–19/k pcs), with deliveries starting from Nov 2025 onwards.
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Negative bias reinforced
While this may be part of the China glove maker’s marketing strategy, pricing could still adjust based on demand, tariffs and counter-moves by Malaysia glove makers. The latest news nonetheless reaffirms our NEGATIVE stance on the sector.
Competition is clearly intensifying, with more capacity from China (targeting non-US markets) and its overseas plants (focusing on the US market).
Although the actual supply/supply timeline from these overseas plants remain uncertain, any meaningful ramp-up will likely exert pressure on pricing and margins. A price war appears increasingly likely, in our view.
An upside risk amid structural headwinds
Read more at SGinvestors.io.
Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
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