BANGKOK -- Thailand's oil and gas conglomerate PTT is jumping into the rubber glove business, aiming to capture a share of the increased global demand for medical supplies since the COVID-19 pandemic began.
PTT has approved an initial investment budget of around 600 million baht, or $19.1 million, to invest through a subsidiary called Innobic, which was recently set up with the aim of becoming the conglomerate's flagship for its life and science, pharmaceutical and medical businesses.
The move is expected to intensify fierce competition in Thailand's rubber glove business, where companies have poured in up to 24 billion baht ($800 million) to increase productivity and tap demand.
Innobic and IRPC, PTT's refinery arm, have formed a joint venture called Innopolymed, which will use a synthetic rubber byproduct of the refinery business as a raw material for making nitrile gloves.
"Initially, we will invest around 600 million baht ($19 million)," said Chawalit Tippawanich, president and chief executive of IRPC.
He said commercial operation is due to start by the fourth quarter of this year. He declined to give further details about Innopolymed's capacity.
Buranin Rattanasombat, PTT's senior executive vice president, said Innobic was formed to seek business opportunities in pharmaceuticals, nutrition and medical devices. He said the company decided to start with rubber gloves because the raw materials provided by IRPC meant it could produce at competitive prices.
"The rubber glove business can generate profit promptly because we do not need to spend a big sum [and] a long time researching and testing before starting commercial operations," said Buranin.
Analysts expect global rubber glove demand to remain on a rising trend over the next few years as COVID-19 inoculation programs across the world spur demand.
The Malaysian Rubber Glove Manufacturers Association estimates that global glove production will ramp up to 420 billion pieces in 2021, up from 380 billion in 2020. Malaysia, the world's biggest producer of rubber gloves, is expected to supply around 280 billion pieces, or 67%.
PTT is a heavyweight competitor for Sri Trang Gloves Thailand, the country's biggest rubber glove producer, which said in January that it had invested 9.9 billion baht to expand its production capacity in its four factories, aiming to produce up to 70 billion pieces by 2026, from 32 billion pieces currently.
Thonburi Healthcare Croup, which operates private hospitals with a total of 963 registered beds, also invested 1 billion baht to build a rubber glove plant with a total capacity of 900,000 pieces per day.
With several companies investing, Thai rubber glove exports jumped 72% to be worth $1.73 billion in the first 10 months of 2020.
That also helped latex farmers. The average price of latex jumped 57% from 38 baht per kilogram in 2020 to 60 baht in 2021.
Thailand is the world's biggest producer of natural rubber, used in making gloves and tires.
Innopolymed, also plans another medical equipment business. It aims to produce nonwoven fabric, or melt-blown fabric, which is used as the filter in surgical masks, as demand is expected to rise in line with that for medical gloves, Chawalit said.