KUALA LUMPUR, April 18 (Xinhua) -- Analysts have in their recent reports shared mixed views on Malaysia's rubber glove sector.
RHB Investment Bank said in its report that the industry demand and supply dynamics are showing signs of recovery, as April and May order volume looks to have picked up meaningfully.
Moving forward, the research house expects the demand recovery to kick in by the second half as it understands that most of the glove inventories that were stockpiled previously have depleted.
Kenanga Research, however, expects the sector's operating environment to remain challenging, plagued by overcapacity, predatory pricing by certain overseas players, weak demand and the high cost of inputs.
Nevertheless, on a slightly brighter note, the research house said further decommissioning of older production facilities locally should help to ease supply pressure, at least bringing about more rational competition amongst local players.
MIDF Research retained a cautious stance mainly due to intense competition which may exert upward pressure on pricing flexibility for Malaysian glovemakers.
On the flip side, the research house noted the replenishment of inventory following the expiration of pandemic stockpiles is anticipated to bolster glove demand.
This, coupled with recent permanent and temporary closures of production facilities, could likely enhance production efficiency and decrease production costs per unit. ■
