KUALA LUMPUR (XFN-ASIA) - One of the worlds largest glove distributors, Kimberley-Clark Corp, will cease producing latex examination gloves partly due to record latex prices over the last few years, the Malaysian Business magazine reported.
The move will mean a loss of business for some latex glove-makers worldwide, including Malaysia, as Kimberley-Clark has been outsourcing some of its business, the magazine said.
At the same time, it noted that aggressive local glove-makers such as Top Glove Corp Bhd and Supermax Corp Bhd will have the opportunity to increase their market share due to the void created by Kimberley-Clarks exit.
Kimberly-Clark Health Care is shifting its production focus away from latex exam gloves to synthetic alternatives over the next four to 18 months, according to Malaysian Business citing an internal memo to distributors.
The memo, dated June 26, said that the corporation is taking the step 'in order to support our growing customer demand for synthetic solutions,' but also due to 'unprecedented increases in the cost of latex raw materials.'
'Since 2002, virtually every aspect of the exam glove manufacturing supply chain has incurred significant cost increases. Especially hard hit has been the latex category, with raw material costs for latex alone increasing over 300 pct since 2002,' it added.
'In addition, energy costs have increased 274 pct in that same time period. These escalating costs, along with other market influences, have forced Kimberly-Clark to make some difficult decisions,' the memo said.
Tyre-grade Standard Malaysian Rubber SMR20, for example, has averaged 879.60 rgt per kilo this month, 35 pct higher than the average price of 653.50 rgt in January and 77 pct higher than the average price of 206 rgt in 2001 .
The magazine said industry watchers are not totally surprised by Kimberley-Clarks move, with some expecting the development in the face of the increasing production costs due to the rise in latex prices.
Latex, the major component in the making of rubber gloves, makes up 55-65 pct of the manufacturing cost.
SMR20 averaged 523 rgt per kg the whole of last year and 453 rgt in 2004. For bulk latex, the average price for 2005 was 382 rgt.
Average prices for SMR20 and bulk latex were 462 rgt and 331 rgt respectively in 2004, 379 rgt and 287 rgt in 2003, 286 rgt and 207 rgt in 2002, 206 rgt and 170 rgt in 2001, and 243 rgt and 203 rgt in 2000.
(1 usd = 3.68 rgt)
ishun.ahmad@xfn.com
ish/swp
© 2006 AFX News
