KUALA LUMPUR (June 5): Outlook for Malaysian glove makers remain clouded in the upcoming quarter, as the industry continues to grapple with tariff-related uncertainty in the US and sluggish demand dynamics, according to research houses.

Apex Securities expects flattish quarter-on-quarter (q-o-q) earnings, with Hartalega Holdings Bhd (KL:HARTA), the world’s largest nitrile glove maker, and Top Glove Corp Bhd (KL:TOPGLOV), the largest natural rubber glove producer, likely to face persistent headwinds from soft US demand, ongoing oversupply in non-US markets, and rising domestic costs.

The US government’s announcement on May 12 of a 90-day temporary tariff reduction on selected Chinese goods — lowering reciprocal tariffs from 145% to 30% — could significantly erode the pricing advantage held by Malaysian glove makers in the US market.

“Amid these uncertainties, most US clients are adopting a cautious ‘wait-and-see’ approach,” Apex said in a note on Thursday.

“Average selling prices (ASPs) may soften further, while sales volumes could decline due to earlier inventory front-loading by US buyers,” it added.

In a separate report, BIMB Securities also echoed concerns over softening ASPs and rising competition, particularly from Chinese manufacturers aggressively targeting non-US markets.

“Malaysia’s loss of market share among non-US customers adds further pressure to the operating performance of local glove manufacturers,” BIMB said.

Chinese producers are now offering gloves at ASPs of US$14–US$17 per 1,000 pieces, undercutting Malaysia’s ASPs of US$17–US$18 per 1,000 pieces for non-US markets.

In the first quarter of calendar year 2025 (1QCY25), the glove sector staged a notable recovery with the overall core net profit surging more than 40-fold quarter-on-quarter (q-o-q).  On a year-on-year basis, the industry swung from collective losses to profit, supported by higher ASPs and the end of a prolonged destocking cycle.

Still, Apex remains cautious: “We anticipate flattish q-o-q performance from both Hartalega and Top Glove in the upcoming quarter,” it said, noting that US tariff reinstatement risks may also weigh on Karex Bhd’s (KL:KAREX) order flows in the near term.

Both Apex and BIMB highlighted that structural oversupply remains a key overhang for the sector, coupled with the absence of near-term catalysts to support meaningful earnings rebound.

“While 2H2025 may see some recovery in order volumes, the overall sector outlook remains subdued,” BIMB said, citing price competition and macroeconomic uncertainty as limiting factors.