05/24/2011

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MALAYSIA: Glovemakers RM170 million expansion plan

Two major rubber gloves producers in the country are investing about RM170 million this year to expand their production capacity, as declining latex price is expected to boost the performance of the glove market in the second half of 2011.

Latexx Partners Bhd and Top Glove Corp Bhd are each investing about RM70 million and RM100 million respectively to expand their maximum production capacities.

Top Glove chairman Tan Sri Lim Chee Wai said that for the second half of 2011, the glove market was expected to perform better as the latex price declined.

He said in the past three weeks, latex price had already dropped by 12% and the company believed it would go down further with improved supply from major rubber producing countries.

"In addition, demand for rubber from China, the world's largest consumer of rubber, has declined to a six-week low in recent weeks, further easing the pressure on latex price.

"We should also see a pick-up in demand for rubber gloves as buyers who had remained on the sidelines earlier this year, will be more encouraged to stock up given the lower price,” Lim said.

Latex price presently hovers around RM9.50 per kg.

On the possible rise in the selling price, Lim said now that the rubber price was coming down, the group might look at revising the price of rubber gloves downwards.

Latexx Partners will undertake the final phase of its expansion exercise this year to gradually raise its annual production capacity to 12 billion pieces in two years from the present 9 billion pieces.

Latexx Partners chairman and chief executive officer Low Bok Tek said its expansion exercise to be completed in two years would add another facility to the existing six plants in Kamunting Industrial Estate, Taiping.

"We will be looking to expand our market share in Europe, Asia-Pacific, and South America, as we want these regions to generate about 50% of our revenue this year, compared with about 30% previously.

"The US market is still our largest single market, which will contribute 50% to the group's revenue this year,” he said.

A recent Bank Islam Malaysia Bhd report said Malaysian rubber glove export could reach RM8.2 billion or US$1.33 billion this year, supported by a strong single-digit growth in global demand and liberalisation of the healthcare industry in major emerging markets.

Top Glove's allocation of about RM100 million is to construct three plants, add production lines for its existing 17 factories, and purchase land for future expansion.(Syed Rashid Ali, Karachi, Pakistan)

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