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Higher cost saving from falling crude oil price.


The impact of crude oil price on glove sector will be indirect on the price of raw material, nitrile. Nitrile prices move in correlation with the price of their main feedstock, butadiene, which in turn follows the footsteps of crude oil prices.
This relationship is backed by strong correlations between crude oil and butadiene of 0.82, as well as butadiene and nitrile of 0.87.
Hence, the weakening of crude oil price will result in lower prices of butadiene – a globally traded chemical – leading to lower nitrile prices.
From the sensitivity analysis carried out, the findings showed that the main beneficiaries in an environment of falling nitrile prices are Kossan, followed by Top Glove and Hartalega.
We understand that our findings may be contradictory to the general view which expects Hartalega, the world’s largest nitrile glove manufacturer, to top the list. The contrasting result is due to less amount of nitrile used by Hartalega, as they are producing the world’s lightest nitrile gloves, weighing a mere 3.7g.

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https://klse.i3investor.com/blogs/huat8888/183615.jsp
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