April 2023
Market Update
Disposable Glove Market Update
Disposable Glove Market Update
Disposable Glove Market Update
Disposable Glove Market Update
As 2023 progresses, the disposable glove market continues to be dynamic, three years after the pandemic turned the market (and the world) upside down.
Shortages and price increases during the pandemic added challenges at every level of the disposable glove business. Manufacturers turned their production lines over to thin medical-grade gloves. Industrial products—especially thick and heavy nitrile—became scarce and expensive.
Over the past 12 months, these challenges have begun to normalize, but we believe we have not yet reached a “new normal.” We expect the market to continue its systematic normalization over the next year.
The disposable glove market is surprisingly risky and complex because so many variables can move in opposite directions—and in different timelines.
It has not always been this way. While concisely growing over the years, the disposable glove market had optimized supply processes in place—all with relatively predictable costs and timelines. The pandemic, however, spurred volatility across variables that had been stable for many years. We look closely at these variables in this report, three years after the pandemic’s start.
We group these variables into three primary buckets: production, transcontinental logistics, and U.S. market dynamics. All of these are essential to assessing the marketplace and what goes into determining the supply, demand, and price of disposable gloves.
It is important to remember that the market is stabilizing, which is good for disposable glove users. What has consistently surprised most players in the market is the volatility across previously stable variables. In sum, the world may have moved on from the pandemic, but not every aspect of every industry has. Similar to the impact of the pandemic on the financial system and labor markets, the disposable glove market remains surprisingly dynamic.
GLOVE PRODUCTION: HALF A WORLD AWAY
Southeast Asia produces up to 80% of single-use gloves. The biggest glove-making countries are Malaysia and Thailand—which have dominated the glove trade for years—Vietnam and Indonesia. China is also a growing player in the global glove market.
There is no U.S. domestic production on any significant scale. To get a glove manufacturing plant off the ground, one needs land, favorable environmental regulations, and all the supporting infrastructure (utilities, transportation, labor, etc.) to align, which is especially challenging in the U.S. Meaning, gloves are much more expensive to produce in the U.S.
Economics for producing gloves and for transporting them across the Pacific to U.S. ports are infinitely more complicated than they would be with domestic production. Most large glove orders require six to nine months of planning.
In the early days of the pandemic, the need for medical gloves—and panic buying on the part of some distributors and organizations—severely limited global supplies. Focusing on thin nitrile gloves made it easier for manufacturers to pump up capacity, as the world needed an estimated 1 trillion disposable gloves quickly. Dozens of factories were funded across the globe, with many starting production by early 2022.
As the pandemic has become more manageable, demand has come down. As new factories spun up, the need for standard 3-mil nitrile medical gloves, which had driven demand, disappeared. As a result, glove manufacturers were forced to reduce production capacity to cut costs and resort to such tactics as using more filler material in glove production. Ultimately, many decided to reduce their production capacity to save on labor, material, and energy costs and to boost utilization rates.
First, the availability and cost of labor are a perpetual challenge for disposable glove manufacturers, especially in Malaysia, which produces roughly 80% of gloves on the market. While skilled positions in a factory, especially in logistics and quality control, require a more educated workforce, mostly migrant workers from such countries as Indonesia, Bangladesh, and Nepal perform the unskilled jobs.
Crackdowns on labor abuses in the last couple of years have pressured glove producers to pay higher wages and provide better living conditions for migrant workers. In recent years the pandemic has spread through workforces, causing factories to go to limited production or shutter entirely for short periods.
Next, when it comes to raw materials, nitrile butadiene rubber and polyvinyl chloride depend on the cost of petroleum, which has been up and down since the war in Europe began in February 2022. Demand is the ultimate driver of oil prices, and as the Northern Hemisphere heads into summer, we will likely see continued volatility in the oil market.
Third, there is the cost of energy, which has been rising for all aspects of glove production. Coal energy-generation costs, however, have fallen back to levels last seen before the war, which could ease a looming surge in electricity prices.
Coal remains No. 1 for energy generation throughout SE Asia, but the use of renewable electricity has been increasing. As a result, Asia is predicted to use half of the world’s electricity by 2025, with China forecast to raise its consumption to 33 percent of global use. In 2000, it used just 10 percent. Such increased demands will force producers to develop better alternative energy sources.
Inflation has been rising globally, and SE Asia is no exception—although the consumer price index in Malaysia, for example, has been running at less than 5% per year.
Overall, the variables above have, at this point, consistently contributed to the increase in costs of producing disposable gloves relative to their prices three to four years ago. At the same time, manufacturers have ample capacity and are set up to meet any sudden increases in demand. In the end, increased production capacity will be helpful, as industry insiders project demand for gloves to return to a pre-pandemic 10-15% yearly growth starting in ’23-24.
INTERNATIONAL LOGISTICS: TO MARKET, TO MARKET WE GO
Most disposable gloves must be shipped via ocean freight. Rates in 2023 are declining for shipping containers from South East Asia to U.S. West Coast ports. Experts fear transport companies will try to force up prices by making fewer voyages and leaving containers behind, delaying the delivery of goods.
Falling volumes have pushed shipping rates into a downward spiral. For example, the cost of shipping a 40-foot container from SW Asia and China to America’s West Coast is now less than $2,000, down almost 90% from its peak of $20,600 in September 2021, according to Freightos, an online freight marketplace.
Shipping companies that made billions in profit in 2022 alone have been using the money to ramp up capacity and buy new vessels. That leaves large shipping operators with a potential capacity glut just as the export boom that propelled rates to all-time highs peters out.
Are these container shipping prices here for the long term? It’s hard to say. West Coast ports ended 2022 with an overall 7.5% decrease in loaded imports and an 8.6% decrease in loaded exports. Some of those decreases were due to the extremely high volumes created by the over-ordering of goods by shippers during the pandemic. West Coast ports will likely return to pre-pandemic volumes in the next year or so.
Adding to these decreases were concerns that International Longshore and Warehouse Union (ILWU) negotiations might shut down West Coast ports. Continued labor negotiations will be the focus in 2023. The ports push for more automation, while the unions seek better pay and working conditions. The results of labor negotiations will likely impact the logistics cost moving forward.
Overall, while the actual cost of shipping containers is on the way to its pre-pandemic level, the increased cost of labor, collective bargaining-related disruptions, rising interest rates, and the impact of financial market volatility on the largest shipping companies are all poised to continue impacting the disposable glove market.
DOMESTIC LOGISTICS: THE LAST MILE
Domestic shipping prices spiked during the pandemic and have begun dropping but are unlikely to return to pre-pandemic levels due to the cost of labor and the general impact of inflation and higher interest rates.
Domestic freight rates are on track to drop during 2023 from their pandemic high points. If that trend continues as forecast, it will follow months of tight capacity and high rates in many transportation modes.
Most companies that need warehousing to store imported products, such as disposable gloves, have seen significant price increases over the past two to three years. Even as supply chain inflation slows, warehouse rates are high because there is a lot of inventory, which leaves less space for the new product.
The U.S. labor market remains dynamic, with low unemployment. Most employees across the U.S., especially at the lower scale, have experienced wage inflation over the past three to four years. Rising interest rates will bring additional costs for most companies as they face the need to spend more to finance debt loads.
Forecasts for 2023 are as varied as the analysts making them. Some predict that economic weakness will intensify and spread more widely throughout the U.S. economy over the coming months, leading to a recession. Others see higher growth and a continuing strong labor market, despite the Federal Reserve’s efforts to slow hiring by raising interest rates.
CONCLUSION: SUPPORTING OUR DISTRIBUTOR PARTNERS
Over the past three years, the variables outlined above had a surprisingly outsized impact on the disposable glove market, especially from a historical perspective. While gloves are a simple product, the volatility of these variables has directly impacted disposable glove prices.
AMMEX has been in the disposable glove business for 35 years, and we dive deep to understand every market aspect. We are not prediction experts, but our experience allows us to provide our customers with reliable information, clear insights, and outstanding support.
In addition, we help our customers navigate the market through our commitment to quality control, compliance, reliability, and overall speed in our responses to market conditions.
Our focus on the dynamic disposable glove segments—Automotive, Foodservice, Manufacturing, Uniform and Linen, and Janitorial/Sanitation—provides a clear and detailed understanding of the industrial-grade market.
We are committed to helping our customers buy the right glove for the job by aligning our product lineup with jobs-to-be-done and glove applications while developing mutually beneficial client relationships. Our mission remains centered on helping our partners improve workplace safety through disposable hand protection. Again, we thank you for your continued partnership and look forward to working with you.
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