Kuala lumpur: CIMB Securities Sdn Bhd expects the revised United States tariff rates for glove-producing countries to lead Chinese glove makers to move their production to the ASEAN region, with Indonesia being a preferred destination.

According to BERNAMA News Agency, Chinese company INTCO Medical is planning to set up its first glove manufacturing plant in Indonesia, with a capacity of 5.0 billion pieces per year, by the end of the year and has further expansion plans. CIMB Securities views this as potentially significant for the region, which might increase pricing competition for Malaysian glove manufacturers, particularly in the cost-sensitive US market.

The firm maintains a ‘Neutral’ stance on the rubber glove sector, citing ongoing challenges such as slow demand recovery, cautious buyer purchasing patterns, high production costs, and declining average selling prices in an oversupplied market, especially with Indonesia’s increased capacity.

CIMB Securities notes that Malaysia no longer has a tariff advantage over Thailand, Indonesia, or Cambodia, though its 19 per cent tariff remains lower than Vietnam’s 20 per cent and China’s 30 per cent, offering slight competitiveness in the US market. The firm anticipates some US glove orders shifting to Malaysia, but cautions that higher tariffs could raise US buyers’ costs, potentially limiting restocking and leading to leaner inventories.

The US has implemented a 19 per cent tariff on Malaysian glove imports, which is a reduction from previously higher rates of 25 per cent announced in July and 24 per cent in April. This new rate will take effect seven days after today’s announcement.