Shares of Malaysia glove maker Supermax sinks after US seizes goods over forced labour

[KUALA LUMPUR] Supermax shares sank on Thursday (Oct 21) in Kuala Lumpur after the US Customs and Border Protection (CBP) ordered personnel at US ports of entry to seize its latex gloves made in Malaysia.

The stock slid 8.9 per cent to the lowest level since May 2020. Trading volume was more than six times the 20-day average at the close. Shares of other glove makers Top Glove and Hartalega Holdings also declined.

The US CBP said on Thursday that it issued the withhold release order against Supermax and units based on information that "reasonably indicates" the use of forced labour. Supermax in a filing said it had begun work on complying with the International Labor Organization (ILO) standards since 2019, and that it would speed up the process.

Malaysia's palm oil and rubber gloves producers have grappled with intense scrutiny over poor labour practices. The CBP previously banned imports from FGV Holdings and Sime Darby Plantation, and last month allowed Top Glove, the world's largest rubber glover maker, to resume shipments to the US after a year-long ban.

The CBP identified 10 of the 11 ILO's indicators of forced labour while probing Supermax, the agency said in a statement.

Supermax said it commissioned an international consulting firm on Oct 11 to conduct an audit into the status of foreign workers at its facilities focusing on the ILO indicators.

Supermax produces up to 24 billion pieces of gloves annually, meeting about 12 per cent of the world demand for gloves. The US accounts for about 20 per cent of the group's sales, and the company plans to divert these shipments to other markets, according to the filing.

BLOOMBERG