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Steps to boost rubber prices will not affect glove makers [16-08-2012]  
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Talks by the International Tripartite Rubber Council on possible measures to boost rubber prices are unlikely to cause a major impact on local rubber glove makers, as the decline in prices is mainly due to oversupply.

"We expect efforts by the tripartite to support latex price and fight market forces to be futile again, given the underlying reason for the decline is a supply surplus situation," said an analyst.

Analysts expect the supply surplus trend to continue over the medium- to long-term.

Earlier this year, the International Rubber Study Group had forecast a persistent surplus in global natural rubber until 2020. This surplus is expected to build from 31,000 tonnes in 2012 to 190,000 tonnes in 2014, thus placing further pressure on latex prices.

It was reported that Thailand, Indonesia and Malaysia, via International Tripartite Rubber Council, were discussing in Bangkok yesterday to find ways to respond to slumping rubber futures.

Among measures the council is looking include limiting rubber exports and boost prices. Thailand, Indonesia and Malaysia control 70 per cent of the global natural-rubber supply.

Rubber futures plunged by over 40 per cent in the past year and reached the lowest level in almost three years, driven by slowing demand from China and Europe.

It was reported that demand in China may fall by five per cent this year as declining truck sales cut tyre use. Based on Bloomberg data, most analysts are still optimistic on major rubber glove stocks.

Top Glove Bhd, the world's largest rubber glove maker, has a target price of as high as RM6.30.

There are 15 analysts recommended a "buy" call on the stock, four analysts recommended a "hold" call and three analysts recommended investors to "sell" the stock.

Supermax Corp Bhd has a target price of up to RM2.50, with seven "buy" calls, three "hold" calls and two "sell" calls. Kossan Rubber Industries Bhd has a target price of up to RM4.40, with 12 analysts placed a "buy" call and two with a "hold" call.

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