It said there is a high chance that the “cost-plus” model widely used pre-Covid-19 might no longer be relevant amid stiff competition, adding that losses are likely if the price war escalates.

“We do not think that this is the time for bottom fishing glove stocks just yet, hence, we maintain our negative stance on the sector,” said Maybank IB in a research note today.

According to news reports, US president Joe Biden may announce a rollback on some tariffs on Chinese consumer goods as soon as this week to counter accelerating inflation in the US.

The investment bank said the potential tariff removal on Chinese consumer goods – including gloves – will be negative for Malaysian glovemakers.

“Being one of the essential items (amid the Covid-19 pandemic and rising Monkeypox cases), and given the insignificant involvement of US companies in glove manufacturing, there is a high chance that there will be a removal of import tariffs on China-made gloves,” said Maybank IB.

To expand their market share, Chinese glovemakers have been selling at lower prices and absorbing the tariffs for their clients, even when they are currently being taxed at 7.5%.

“Without the import tariffs, there will be more room for the Chinese glovemakers to adjust their pricing and that could lead to a further cut in ASP.

“We were told that the Chinese glovemakers are currently selling below US$20 per thousand pieces compared to Malaysian makers’ at around US$22-24 per thousand pieces,” said Maybank IB.

At 4.02pm, glove producers Kossan added two sen to RM1.28, Rubberex edged down half a sen to 50 sen, Top Glove was flat at 94.5 sen and Supermax eased one sen to 81 sen, while Hartalega slid six sen to RM2.66.