The rubber products sector is set to benefit from improving demand and strengthening average selling prices (ASPs), according to recent reports by RHB Investment Bank (RHB). The industry's production run rate and order volumes showed notable growth in the second quarter of 2024 (2Q24), with a projected 10% quarter-on-quarter (QoQ) increase in volumes. Malaysia's glove export volumes rose by 8% QoQ and 29% year-on-year (YoY) in 2Q24, contributing to a 10% QoQ increase in export value to MYR3.6 billion. The outlook for the second half of 2024 (2H24) remains positive, supported by anticipated demand recovery and higher ASPs.

RHB has maintained an OVERWEIGHT rating on the rubber products sector, highlighting top picks including Riverstone, Hartalega, and Kossan Rubber. The firm expects a meaningful improvement in profitability as demand recovers and ASPs rise. The sector's ASPs are currently between USD20-21 per 1,000 pieces, reflecting a narrowing gap with Chinese competitors and indicating minimal risk of a price war. RHB forecasts global glove demand to grow by 22% in 2024, driven by increased restocking activities and a gradual balance in supply and demand.

The industry's plant utilisation rates have improved to 60-80% following capacity rationing exercises in 2023. RHB anticipates that global glove supply will increase by 7.3 billion pieces in 2024, supported by planned capacity expansions by major manufacturers such as Hartalega and Top Glove Corp. As the sector moves towards a more balanced demand-supply dynamic, RHB remains optimistic about its profitability outlook for 2024.