Reporter | Tian Siqi
The cumulative number of confirmed cases worldwide has accelerated beyond the 8 million mark. The menacing coronavirus has caused countries to frantically grab medical protective equipment. Rubber gloves are also one of the commodities in high demand, which has made the Malaysian rubber glove company, which together accounts for 65% of the global supply, a lot of profit.
Top Glove, the world's largest glove maker, reported that in the nearly three months to May 31, the company's net profit soared 366% to $81 million, and sales also hit a new high. According to the company, it has 45 factories and an annual output of 78.7 billion gloves.
The company's stock price soared 223% this year, bringing the net worth of its founder, Lin Weicai, to $2.5 billion. The company's executive director said at an analyst briefing last week that "the best is not yet coming" and that there will be "more spectacular performances" in the coming quarters.
The Top Glove document shows that there is currently an 180% increase in monthly sales orders, and the delivery period has to be increased from 40 days to 400 days, that is, the orders placed now will not be delivered until a year later. The company will try to ensure that the gloves reach the countries where they are most needed first, while also prioritizing glove purchase requests from governments that engage directly with the company.
Since the beginning of the year, growing demand has led to a 30% increase in the average selling price of Top Glove products.
Another Malaysian glove maker, Supermax, saw its share price soar 394 percent over the same period, exporting its products to more than 160 countries and producing 24 billion gloves a year. The company's founder, Thai Kim Sim, thus became the new billionaire.
Walter Aw, an analyst at CGS-CIMB Research, said wearing gloves has become a new norm for both medical and retail uses. In the long run, high-frequency use will benefit manufacturers. And Supermax is not a supplier, but a private label, which means that it can be sold directly to end customers at a higher price.
As early as the colonial period, the British introduced rubber trees from Brazil to Malaysia in the 1870s. Low labor costs allowed the Southeast Asian country's rubber products industry to flourish and became a glove powerhouse in the 1980s. Malaysia exported a total of 170 billion gloves last year.
As demand for rubber gloves continues to grow due to the pandemic, Malaysian real estate developer PerMaju also announced its entry into glove manufacturing earlier this month. The company plans to start construction of a glove factory this year, with the goal of producing 1 billion rubber gloves in its first year.
The Malaysian Rubber Glove Manufacturers Association estimates that global demand for rubber gloves could grow by 11 percent to 330 billion this year, two-thirds of which will come from Malaysia.
As the world's largest rubber exporter, Thailand's rubber glove market has also expanded. In the first four months of this year, Thai rubber glove exports increased by 16% year-on-year.
Olamon SupaWesem, director of the Trade Negotiations Department of the Ministry of Commerce, stressed that rubber gloves are essential protective equipment for medical staff, and rubber gloves are becoming a daily necessity as people pay more attention to hygiene. She stressed that Thailand not only produces latex, but also has competitive advantages in terms of cost, price and quality.
In 2019, Thailand produced more than 20 billion rubber gloves, with exports accounting for 89% of total production. Thailand, which earned $1.2 billion from rubber glove exports last year, is the world's third-largest exporter of rubber gloves, after Malaysia and China.
From the perspective of raw rubber, while the consumption of rubber glove manufacturers continues to rise, the demand from car manufacturers, the largest customer base in the traditional sense, has dropped significantly. Many rubber factories, especially those supplying major tire manufacturers such as Bridgestone, have difficulty selling physical rubber and are forced to turn to futures market delivery.
In addition to Malaysia targeting the rubber glove market, Thailand also intends to use more rubber domestically as a raw material for road and road signs.