Oil Spike Fuels Unlikely Rally in Malaysian Glove Makers

Last week, Brent crude oil prices broke through $100 a barrel and reached a four-month high of $109.97 on September 11th. Since then, oil has remained elevated, with Brent still above $100 as of September 16th.

In Malaysia, glove makers saw unexpected surges over the last five trading days to September 15th. Top Glove Corporation Berhad led the pack with a gain of +27.56%, while Hartalega Holdings Berhad jumped by +23.81%. Kossan Rubber Industries Berhad and Supermax Corporation Berhad also chalked up gains of +17.14% and +14.08% respectively.

The rally might seem counterintuitive, but it's not a pandemic-driven demand shock this time. Instead, the reason for the surge lies in the production costs of nitrile gloves, which are made from petrochemical feedstocks including butadiene and acrylonitrile. When crude oil prices spike, the cost of producing nitrile gloves tends to rise as well.

However, higher input costs should normally mean thinner margins for glove makers. But in this case, the surge in production costs may have ended a three-year price war between Malaysian and Chinese producers. Intco Medical, China's market leader, was reported to have raised its prices alongside the oil spike. This move gave other producers room to charge more.

The US tariffs on Chinese medical gloves also play a role in this story. The US raised tariffs on Chinese gloves to 50% in 2025 and 100% from January 2026, making them far less competitive in the high-margin US market.

While there are legitimate reasons for glove stocks to attract attention again, the supply glut remains an elephant in the room that the bulls must never forget. Industry analysts estimate a global oversupply capacity of around 418 billion pieces versus demand of roughly 330 billion. Additionally, there are an estimated 40 billion units of hibernated Malaysian capacity and another 30-50 billion units under construction across Southeast Asia.