KUALA LUMPUR: Malaysia's rubber industry has maintained its strong performance, with exports surging to RM44.43 billion in the first half of 2021 from RM17.77 billion in the same period in 2020.
Industry officials expect the country's rubber exports to reach a new high for the full year, but an economist simmers down any high expectations of a similarly solid performance in the second half of the year.
The Malaysian Rubber Council (MRC) said the RM44.43 billion was a 150 per cent jump over the first six months of 2020, fuelled by much stronger exports of rubber gloves.
"Gloves products remained the largest export income churner for the rubber industry. The global per capita consumption of rubber gloves is expected to increase to 25 pairs in 2021 driven by higher usage of gloves in Malaysia's major export markets such as the US and Europe as well as large emerging markets particularly in the Asian region.
"The country's rubber glove industry will maintain its positive momentum and exports are expected to reach a new high for the full year of 2021," MRC said today.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the growth in rubber-related products should normalise going forward as the base was already higher.
"What is more important is how the industry players have responded to the prevailing business condition. They have been actively increasing their capital expenditure to ensure that they are able to meet the rising demand going forward," he told the New Straits Times today.
Afzanizam said the entry of new players would add more colours to the competitive landscape which traditionally could have some impact on the average selling price.
"In a nutshell, the rubber industry especially glove sector has been the main driver for Malaysia's exports. With a weak ringgit, it could continue to provide further support to the industries as their prices in foreign currency terms would become highly competitive," he said.
Putra Business School associate professor Dr Ahmed Razman Abdul Latif, meanwhile, expects the same trend in the second half due to several factors.
"At the moment, rubber price is still on an uptrend since early July and last year. If we looked back at the third quarter (Q3) of 2020, that was when we suffered the greatest contraction in 2020.
"This year it is not going to be like that since we have started to open the economic sectors by phases in several states and with ongoing vaccination programs, we can expect to have more sectors to be open in the next few months. Therefore, I expect the demand for rubber industry to remain robust and higher than the second half of last year," Ahmed Razman said.
Elaborating on the industry performance, MRC said the global demand for rubber gloves in volume terms was expected to still be in double-digit growth of between 12 per cent and 15 per cent this year.
Downstream rubber product exports increased by 180.2 per cent in the first half, accounting for 89.7 per cent of total rubber industry exports, owing to strong performance in latex goods particularly gloves.
Latex goods such as rubber gloves, latex threads and condoms recorded an increase of 200.1 per cent, attributable to the Covid-19 pandemic.
Latex goods accounted for 93.9 per cent of rubber products exports, while dry rubber products accounted for the remaining 6.1 per cent.
The gloves sub-sector expanded 210.2 per cent to RM36.54 billion, while dry rubber products rebounded with an outstanding growth of 38.2 per cent to RM2.41 billion from RM1.75 billion in the first half of 2020.