04 May 2012

Hartalega Holdings MD Kuan Kam Hon expects nitrile glove selling prices to come down as much as 5% in the immediate months to pass on savings to customers

(HARTA closing stock price yesterday (3.5.2012) was RM 7.85 )

World's biggest nitrile glovemaker Hartalega Holdings Bhd expects glove prices to slide as much as five per cent in the immediate months.

"Nitrile gloves are currently selling at US$32 (RM96) per 1,000 pieces. It is likely to come down to around US$30 (RM90) in the immediate months. We'll pass on the savings to our clients," said managing director Kuan Kam Hon.

"We expect butadiene price to come down further because suppliers in China, Japan, South Korea and Taiwan have cut back on their production output, given bearish market sentiment," Kuan told reporters after a shareholders' meeting here yesterday.

According to authoritative chemical industry journal ICIS, global demand for butadiene is around 11 million tonnes per year. The petroleum derivative is now selling for US$2,800 (RM8,400) per tonne.

Right now, Hartalega supplies 17 per cent of the world's demand of 45 billion pieces of nitrile gloves per year.

Since the last quarter of 2010, Hartalega has experienced keen competition from Top Glove Corp Bhd, Supermax Corp Bhd, Kossan Resources Industries Bhd and Latexx Partners Bhd as they switch more of their production lines to make nitrile gloves.

Many of them have also started to step up mechanisation of their production lines. Machines from China are being fitted in to accelerate their lines to run at 26,000 pieces of gloves per hour.

Asked if he is anxious of the competition hotting up, Kuan smiled.

Currently, Hartalega is the world's only rubber glovemaker that has fully automated its stripping and packing lines. Still, it is not one to rest on its laurels.

In fact, Kuan said he will continue to press on his team of mechanical engineers to crank up the production lines which are already running at break-neck speed of 40,000 pieces per hour.

When asked on expansion plans, Kuan replied that the group is putting up Plant 6 that can churn out another 3.5 billion pieces by mid-2013. "It'll cost around RM200 million," he said.

"I believe global demand is still very positive as we continue to capture larger market share through our value proposition.

"As production goes up, the cost per thousand pieces of gloves should come down and profitability should improve," he added.

Since its production lines are fully automated compared to its rivals, Hartalega has earned its name as the world's fastest glovemaker.

Not surprisingly, its productivity per worker is RM306,000. The industry's average is only RM190,000 per worker.

Source: www.btimes.com.my


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