Rubber sector to maintain resilience on higher export earnings, glove demand

The rubber industry is expected to maintain its resilience next year, driven by higher export earnings of rubber products as well as stronger demand for rubber gloves.

Malaysian Rubber Board Director-General Datuk Dr Salmiah Ahmad said rubber products would continue to be the main contributor to the industry in terms of export earnings and it was expected to hit RM40.5 billion next year.
“This would be a jump in the export contribution of the rubber industry as a whole, estimated at RM38 billion for 2013,” she told Bernama.
She said for rubber products sector, about 25 per cent of Malaysia’s total export went to the United States while the same percentage went to the European Union countries, mostly to Germany and the United Kingdom.
Among the rubber products, gloves have been the main export product to these countries and would continue to be the major contributor (of about 80 per cent) to the sector’s exports earnings.
On prices, Salmiah said after reaching its peak at 1,734 sen per kg on February 18, 2011, the natural rubber (NR) market was on a slow patch and prices were on the declining trend amid a lull in global demand particularly in advanced countries.
However, she noted that prices would be better next year compared with the current year, as China’s consumption of NR was projected to grow by some 6.5 per cent in tandem with its economic growth of about 7.5 per cent.
“China consumed approximately 35 per cent of the total global NR consumption.
“Another plus factor is that the economic growth in advanced Western countries particularly Eurozone are expected to register positive growth in 2014, potentially signalling better demand for the automobile and transportation industries,” she said.
On the sector’s sustainability, Salmiah said a total of 11,600 hectares (ha) of new areas will be planted with rubber next year.
“In 2013, the total target for new planting is 10,615ha, out of which 3,000ha in the peninsula are implemented by the Rubber Industry Smallholders Development Authority, 3,215ha in Sabah by the Sabah Rubber Industry Board and 4,400ha by the Department of Agriculture Sarawak.
“For the January to October period, 4,018ha have been planted, 3,940ha are under work in progress while the balance of 2,656ha have yet to be planted,” she said.
Meanwhile, MIDF Amanah Investment Bank Bhd has a “positive” call for the rubber glove sector as it expected the environment to remain conducive for industry players, with the average latex price projected at RM5.67 per kg for 2013 and RM5.50 per kg for 2014.
An analyst from the research house said the ringgit, projected to trade at between RM3.15 and RM3.20 to the US dollar next year, would be positive for most glove players as the average selling price of their products would be less volatile.
“We expect the demand trend for rubber gloves to sustain in 2014 due to relatively low natural rubber and nitrile butadiene rubber latex prices, leading to more competitive pricing among glove players,” the analyst said.
For the first nine months of 2013, the volume of rubber glove exports grew 32.4 per cent year-on-year to 533,352 tonnes from 402,887 tonnes in the same period in 2012.
The value of the rubber glove exports for the January to September period in 2013 amounted to RM7.93 billion, up 0.5 per cent year-on-year. The small increase was due to the lower average selling prices of rubber gloves and the fall in raw material prices.
At the close of the last trading day for the year, the official physical price for tyre-grade SMR 20 decreased five sen to 747.5 sen a kg and latex-in-bulk slipped 6.5 sen to 541.5 sen a kg.
(Source: Bernama)

Malaysian Rubber Board