The U.S. Customs and Border Protection (CBP) issued an order on Monday to seize the imports of disposable gloves from Top Glove Corporation Berhad, the world’s largest rubber glove producer, after finding evidence that certain manufacturers have been using forced labor.
Last year, the U.S. also issued a ban on two of Top Glove’s manufacturers in an allegation of forced labour, which the company publicly announced that the matter was solved and proceeded to contact the U.S. CBP to lift the ban. However, the order on Monday elevated the penalty from banning two manufacturers to all manufacturers under Top Glove.
According to the data, Top Glove recorded over 54 billion baht from exporting disposable gloves to North America, which is equivalent to 22% of its total export. The company booked more than 14 billion baht of net profit in 2020.
Ms. Thanawan Sa-ngiamsak, Director of Sri Trang Gloves (Thailand) Public Company Limited (STGT), told “Kaohoon Turakij” that the banning of Top Glove could reflect positive sentiment towards the company. However, in the short-term outlook, the company expected the impact from banning would not immediately affect the market due to the news had just been recently released.
STGT expected orders affected by the banning would spread to other producers, which would lead to higher average selling price as well. However, the production capacity of STGT and other producers is running at their max capacity with a large amount of pending orders. The company did not specify when the positive factors from this banning would take effect, but based on the demand and supply theoretically, the company should benefit from the banning of Top Glove.
The American market has the highest spending power along with the highest disposable-glove consumption as well, especially nitrile gloves produced by Top Glove and STGT. Thus, the company would no doubt benefit from the missing supply in the market.
As for the listing in Singapore Exchange as a Secondary Listing by way of Introduction, Ms. Sa-ngiamsak stated that the listing is in the process of preparing documents for filing. The process has been delayed due to the Covid-19 outbreak and the Work-from-Home measure. The company expected to be listed in the Singapore Exchange around April or May 2021 without any difficulties.
Ms. Sa-ngiamsak stated that STGT’s 1Q21 performance continued to grow in a positive direction, in line with an increase in average selling price compared to 4Q20. However, the container shortage in January and February might have some effect on its earnings in 1Q. The situation is expected to return to normal in 2Q21.
Lastly, the fire incident occurred in February at its factory in Surat Thani, the company expected to resume the production in May.