RHB: Malaysia's rubber sector faces headwinds amid global competition, weak pricing power
The firm said the pricing power of Malaysian glove manufacturers has diminished since the entry of Chinese manufacturers, based on its observation.
"We understand that cost pass-through is now more challenging than during the pre-Covid-19 period, as glovemakers are only able to pass on 50 per cent of any cost increase to customers vs a full cost pass-through previously.
"With no signs of competition easing, we expect glovemakers' profitability to remain under pressure in the near future," it said in a note.
That said, RHB Research said competition remains intense in non-US markets due to the hostile pricing strategy adopted by Chinese manufacturers.
The firm also expects the commissioning of new plants in Indonesia and Vietnam to pose a threat to Malaysia's rubber product sales to the US by as early as Nov 2025.
"Given the intensifying competition expected in late fourth quarter (Q4) 2025, we hold the view that investor sentiment in the glove industry will remain weak throughout the second half of 2025 (2H25)."
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