In a research note today, it said that local glove makers would benefit from the broadened average selling price (ASP) discount on Chinese glove imports in 2025, following the US’ imposition of an additional 10% tariff on top of the existing 50% on Chinese glove exports to the US.
“For illustration purposes, a 50% plus 10% tariff hike is expected to raise Chinese glove producers’ ASP to US$27 – US$29 (RM120.80 – RM129.75) per 1,000 pieces [from an assumed base case ASP at US$17 -US$19 (RM76.06 – RM85.01) per 1,000 pieces],” it said.
Therefore, it said this positions Malaysian glove makers’ ASPs of between US$18 to US$20 (RM80.54 – RM89.49) per 1,000 pieces at a steep 25%-32% discount versus the Chinese alternative.
“We keep our 2025 forecast ASPs at US$20 – US$21 (RM89.49 – RM93.96) in our earnings model for now.
“Any volume loss in non-US markets can be offset by higher demand from the US, which historically commanded higher ASP than non-US markets, and the US had historically accounted for 35%-40% of Malaysia’s total glove volume,” it said.
The investment bank said Hartalega Holdings Bhd is the biggest beneficiary by virtue of the fact that the US market typically accounts for 50% of its sales volume.
It said buyers have been diversifying sources as a risk management strategy, opting to purchase from other countries including Malaysia, potentially benefitting Malaysian players including Hartalega, Kossan Rubber Industries, Top Glove Corporation and Supermax Corporation.
Regarding the semiconductor benefit from US tariffs, it said that Malaysia, as a key player in outsourced semiconductor assembly and test (OSAT) and back-end semiconductor services, would stand to benefit from supply chain diversification as global technology firms may accelerate the adoption of a more aggressive China+1 strategy to reduce reliance on China.
“Over the medium-term, Malaysian firms are well positioned to capitalise on the structural shift in global supply chains,” it said.
However, Kenanga IB said Malaysia may experience varying degrees of impact depending on supply chain realignments, trade policies and broader geopolitical dynamics.
Last Saturday, US president Donald Trump signed an executive order imposing a 10% tariff on imports of Chinese goods effective Feb 4, 2025.