Middle East (ME) tensions have pushed crude oil prices higher, raising concerns over higher raw material costs for glove makers, particularly nitrile latex, while natural rubber latex prices may also see spillover effects amid commodity volatility and the wintering season.
Short-term uncertainty from the war
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We maintain our NEUTRAL on the glove sector as downside risks appear largely reflected in valuations following the recent share price correction.
Middle East tensions raise raw material cost risks
The recent escalation in ME tensions has pushed crude oil prices higher, raising concerns over potential cost pressure for glove makers. Higher oil prices could lift nitrile latex costs, while natural rubber latex may also rise amid broader commodity volatility and the wintering season.
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As gas is the key energy source for Malaysian glove makers, higher gas prices could reduce their cost competitiveness against China producers that rely on coal.
War risks disrupt shipping, delay revenue recognition
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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/.
