Rubber Gloves, 2007: Exports still thriving…beware of China (Business Brief No.1913)

Rubber gloves are the second-most important rubber product after auto tires. In the midst of rising demand for rubber gloves globally, demand for concentrated latex has increased in tandem. Despite high prices of natural rubber, demand for concentrated latex, a key raw material for medical glove production remains high as it is safe to use. Looking ahead, global demand for both medical and non-medical gloves is expected to be on the rise thanks to the prevailing health-conscious trend and hygienic production, especially in food and service industries. Globally, Thailand is among the forefront glove exporters, being ranked second in exports of gloves for household use and others, and third in shipments of medical gloves. However, Thailand is confronted with heightened competition, particularly from Malaysia, the world's largest exporter of medical and non-medical gloves as it has made efforts to boost its market share. As well, Indonesia and China have lately emerged as Thailand's archrivals.

As far as the estimate goes, demand for gloves made from natural rubber around the globe is expected to total some 120,000 million pieces[1] per year, with an annual growth of 15-20 percent. Presently, rubber gloves are widely-used in various industries in addition to medical and dental services. This is particularly true for food and hygiene-related industries. The rising price of concentrated latex – a key raw material for rubber glove production has prompted producers to raise the prices of rubber gloves. However, this has led to fiercer competition among rubber glove producing countries but has had little effect on importers of rubber gloves. That is to say, surge in rubber glove prices seems to be acceptable among importers. Global demand for rubber gloves is thus rising steadily amid the prevailing health-conscious trend of consumers, more stringent hygienic regime, particularly in food processing industry and services, not to mention concerns over epidemics and bioterrorism.

Currently, Malaysia occupies the largest market share in the world markets, accounting for 60 percent, for both medical and non-medical gloves such as those for household use and other purposes. In 2006, despite increases in prices of Malaysian-made rubber gloves, prompted by rising rubber prices, their exporters forecast that demand for the product globally will remain on the rise. They also expect to retain their market share in the world markets thanks to their intensive R&D and strict standard requirements for medical glove exports, i.e., the lowest protein content in rubber as a preventative measure for latex protein-allergic wearers. This issue should to be high on the agenda for other rubber glove producing countries. Moreover, the fact that the Malaysian government has recently encouraged expansion of rubber cultivation areas in the country is expected to result in ample supply of concentrated latex for domestic use and less dependence on this raw material from Thailand.

Meanwhile, Indonesia is a rival in terms of rubber exports that is quite worth watching. At present, Indonesia has a capacity to produce 9,500 million pieces of rubber globe per year, after combining this amount with the production capacity of Malaysia, Thailand and Indonesia, their total production capacity accounts for 90.0 percent of the production capacity in the global market. The interesting point of rubber glove industry in Indonesia is that Indonesia's rubber production volume has tended to grow steadily since 2001. And from 2004, the growth rate of Indonesia's rubber production volume has increased higher than Thailand evidently. As between 2004-2006, the growths of Indonesia's rubber produce are tantamount to 15.3 percent, 9.9 percent and 8.8 percent respectively. There is also a high possibility that Indonesia will outrun Thailand to be the number one rubber production country of the world, which means that Indonesia will have enough raw materials to feed its rubber product industrial factories, including the chance that rubber glove industry of Malaysia will move the production base to set up rubber glove production factories in Indonesia. The only problem for Indonesia concerning rubber glove production is the lack of energy, i.e., the natural gas to run rubber production factories, leading to the projection that the rubber glove production capacity this year (2006) will subside.

For China, it is able to step forward to be Thailand's major rival in rubber glove exports because Malaysia's key rubber production factories have moved there to set up production factories as Malaysia foresees that China will be the big market in the future following the growth of food industrial factories and service business in China. Moreover there are also supportive factors in terms of low wages and the expansion of rubber plantation areas, which will be able to be the base of raw material to feed factories in the future. Setting up production factories is also tantamount to occupying the domestic market in China, including being the base to expand exports. In 2007, more rubber glove production factories will be set up in China, making China become the rival in this industry that is worth watching in the future.

At present Thailand still dominates the first ranks of rubber glove exports by relying on the favorable edge in its status of being the top rubber production country of the world. However Thai rubber glove exporters must speed up self-adjustment particularly in terms of production technology and R&D for the products to meet consumers' demand. For the competition of rubber glove trade in the global market is intensifying because of existing exporter; Malaysia and the new exporters, i.e., China and Indonesia. This is due to Malaysia, which is the world's number one producer and exporter of rubber gloves adopting the strategy to extend investment to set up rubber glove production factories in the country that is also a large market like China, making China move on to be the world's top rank rubber production exporter, thus also being Thailand' rival of rubber glove exports that is quite captivating. As China is expanding its rubber plantation areas which will be the raw material source to feed rubber glove production factories in the future, therefore there is a strong opportunity that China will outrun Thailand. Indonesia is also considered a coming fast rival following its extension of rubber plantation areas and the chance is high that Indonesia will probably outrun Thailand to be the world's top rubber production country. It means that Indonesia will have enough raw materials to feed rubber product industrial factories and the benefit from Malaysia's rubber production industry moving the production base to set up rubber glove production factories there.

[1] Association of Southeast Asian Nations Rubber Glove Manufacturers