Gloves4u are constantly monitoring the factors that affect the costs of disposable gloves. There has been an unprecedented course of increases both in raw material costs, manufacturing and environmental challenges. These increases have severely impacted our cost prices on Vinyl, Nitrile & Latex disposable gloves. The following information sets out the reasons for the increases and provides information on the influencing factors that have caused the increases in price.
In December, due to environmental issues the Chinese government closed down around 1200 Vinyl Glove factories in China. These manufacturers equate to over 50% of the global demand for vinyl gloves and the forced shutdown has significantly impacted vinyl glove production and supply, it is likely that this will last through until at least April 2017.
The government have also placed restrictions on coal usage which is forcing the price upwards. The net result of these has been increases to our costs of 25% to our delayed December shipments and we are not yet getting certainty as to our ongoing shipments for February onwards. We will keep you informed of these price rises as we get further clarity.
Challenges related to rising energy, raw materials and packaging costs are causing the pricing to be very unstable. In the last 5 months, coal prices have risen 122% and packaging material costs have increased by 40%. In addition, the weakening dollar has also produced an inflationary effect over the price of vinyl gloves because most of the oil is traded in US dollars. It is expected that if dollar continues to weaken then further increase in the price of crude oil will be experienced and the cost of vinyl gloves will also see an upward pressure. If further revaluing of Yuan occurs then corresponding increase will be seen too.
Visible smog seen over a major city in China.
Beijing and much of north eastern China are currently shrouded in a smog red alert, causing some factories to shut down, highways to close and airlines to cancel flights. Poor air quality plagues China.
Latex is a natural product that comes from rubber trees . It is a white, milky liquid that flows from the tree when the tree bark is scored. During the rainy season the trees are tapped every day after the rain has stopped. Due to excessive rainfall, harvesting has been disrupted. Heavy rainfall and floods across Kelantan, Pahang and Johor has contributed to major increases in the cost of Latex gloves. The floods in low-lying areas have not receded and many smallholders have had to relocate to flood relief centres. Rubber tapping activities have now been prevented for some time
The Malaysian Rubber Glove Manufacturers Association (Margma) said that medical glove pricing is set to rise as manufacturers are facing a shortage of natural as well as synthetic latex and there has been a whopping spike in prices of nitrile and natural latex in recent weeks.
Two weeks ago, natural latex sold in bulk, was RM7.15 per kg. Recently, it jumped to RM8.00 per kg in the spot market, so when you compare that to the RM4.56 per kg just four months ago, prices have surged by more than 75%. Adding to that, the Meteorological Department has forecast the ongoing bad weather to lasts until at least March 2017.
A rubber tree farmer, rows a boat in floodwaters in his rubber plantation with his friend in a district in Nakhon Si Thammarat Province, southern Thailand, January 18, 2017. REUTERS/Surapan Boonthan
The unexpected surge in price of latex has surprised everyone and the market is bearing the negative effects of it. Currently, Latex is at the highest market price in history. In addition to the high rate of rainfall, demand of Latex is also increasing in others parts of the world. Prolonged economic slowdown has also called for a replacement of inventories all over the world.
Every 2% increase in the cost of raw latex results in one percent increase in the cost of a glove. In the past year costs have increased 97%, resulting in 49% surge in the production cost of the latex gloves.
The general outlook is that Latex gloves will become the most expensive, and seasonal drops and spikes seen each year continue to make the prices unstable. If the US dollar was to stabilize to its present position against the Malaysian Ringgit there may be reductions but it would seem that as the US Dollar is still weakening we are likely to continue to price surges.
Nitrile prices are soaring and are now reaching a four year high. Butadiene is the main monomer that is used for the production of nitrile rubber, the other copolymer is acrylonitrile. These monomers make a polymer that is used for preparation of nitrile gloves. In the past few months a significant increase in its price of butadiene has been noticed. In September 2016 the price per tonne of butadiene was $950 USD, there was a sharp surge in its price has occurred and now it is $2500 USD per tonne.
The increase in demand is attributed to expectations that demand for tyres will increase in 2017, due to economic expansion in developed markets. As a result, tyre companies are building up large stocks of butadiene rubber to make tyres. This compound is used for manufacturing of a large variety of industrial products that include synthetic rubber, cable sheeting, hoses, belts, automotive transmission and wires. China being an active industrial country has picked up most of the nitrile rubber.
Adhesive pigment binders are also being produced by it in large quantities. Another reason in this increase is reported to be shortage in the amount of butadiene because of sudden closure of most of its manufacturing plants.
Butadiene constitutes around 50% of the cost of Nitrile gloves so production costs are set to increase around 15-18%.
As our costs have been severely impacted on Vinyl, Latex & Nitrile we wanted to give you advanced warning that in time our prices will be increasing. Gloves4u will continue to monitor the inflating raw material costs and our procurement team are working hard to reduce the impacts of these increases.
This market information will help you to see that the cost increases are outside of our control, but rest assured that we will do all we can to minimise these increases and we will look at ways of protecting our clients from the full impact of the increases.