Hike in fuel, rubber prices has its impact on the industry
KOCHI: Rapid fluctuation in rubber prices has caused concern among manufacturers of rubber gloves in the State. The sudden fall in prices of latex is not much beneficial to the manufacturers as customers demand a simultaneous reduction in prices of the products. This poses problems in marketing, the manufacturers say.
Closure of units
In fact, the gloves manufacturers were facing tough times a few years back and that had resulted in the closure of several units. At least four units in the Cochin Special Economic Zone (CSEZ) were closed earlier and subsequently taken over by new companies. Five gloves manufacturing units are functioning in the CSEZ now apart from another unit which is in the process of being taken over by a new manufacturer.
The problems confronted by the exporting units at the CSEZ had originated a decade ago when the bulk of the exports went to the U.S., said Ani Kumar, managing director of Safe Care Rubber Products, a manufacturer of gloves at CSEZ. High capacity utilisation by the units and good demand from the U.S. were the order of the day then, but a sudden collapse in the U.S. markets took the manufacturers to the downside. Malaysian gloves had conquered foreign markets then because of the lower prices quoted by the manufacturers in that country. Malaysia had been offering subsidies for latex to the manufacturers there.
Marketing of gloves in the internal market was not feasible on account of the high customs duty imposed on SEZ units for local sales. Later, the situation improved as the government reduced the customs duty on internal marketing. The local demand too went up. “Now most of the doctors use gloves for examining patients,” says Mr. Kumar. Of course, profitability has come down with the fluctuating latex prices. “When there is an increase in latex prices, we can’t increase the prices of the products immediately, but when the latex costs less, there is demand from the clients to reduce the prices of products with immediate effect”. This apart, advance quotation is required for the export market. The fluctuating latex prices would offset the export process, he said.
The hike in fuel and rubber prices had its impact on the gloves manufacturing industry, says C.A. Rahim, head of the Asma Rubber Products, another gloves manufacturer at CSEZ.
The industry will sail ahead smoothly as far as there is demand locally. As of now, the manufacturers are able to produce fine products which have good demand. He too expressed apprehensions over wide fluctuation in latex prices.