An explanation of glove shortage and price inflation
Our country is experiencing extreme challenges as it relates to gloves. The glove shortage has caused the price to rise substantially. On top of that, the Chinese New Year will shut down factories for a time, which will then affect supply chain even further.
Renowned glove manufacturing companies could benefit from a massive rise in average selling prices during the current year. This is due to the worldwide shortage of medical nitrile exam gloves. According to a reputable report, CGS-CIMB claimed that the company believes the average selling prices of its glove could increase by 50 percent, quarter on quarter, during the third quarter of the current financial year (expected to end by March 2021).
Hartalega also believes that the ASPs will continue to increase during 2022’s first quarter especially considering the serious shortage in the glove supply around the world. That said, Hartalega’s average selling prices may lag behind during 2022’s second quarter.
Projected Glove Shortage for the Coming Years
Judging by the current situation, Hartalega firmly believes that the global medical nitrile exam gloves shortage could be around 120 billion for the at least thenext couple of years.. Incredibly high demand from non-healthcare and healthcare sectors is expected to be the main reason behind this shortage. Even worse, the projected figures could be even higher.
While glove companies (existing and new ) are doing their best to expand production, there is very little chance that they will meet the ever increasing demands of the healthcare industry.
Why Can’t Companies Meet the Demands?
While the increased demands of medical nitrile exam gloves is the obvious reason behind the shortage, Hartalega and other companies can’t keep up with the demand for several reasons. First, obtaining raw material supplies is not easy. Also, , most companies lack the workforce and can’t pay the high rates to comply with Act no. 446 - worker’s Minimum Standards of Housing and Amenities Act.
The pandemic caused plenty of construction delays, which makes production even more difficult during these times. Hartalega shut down eight of its product lines during the 15th of December 2020, which is around 0.5 percent of its overall output. Detection of more than 35 Covid-19 cases was the main reason behind this shutdown as the company had to conduct a mass testing before allowing its employees to return.
Fortunately, these facilities resumed production after a week, and the impact on production was not as bad as expected. Despite the obstacles and hindrances, Hartalega and some other medical Nitrile exam glove companies still plan to expand, but there is no telling when these plans will come to fruition.
The United State’s Dependency on China
Most healthcare facilities in the United States are highly dependent on China when it comes to the supply of nitrile gloves. With Chinese New Year just around the corner, factories will be shutting down February 6th, prior to the holiday which will cause a massive decrease in the production of medical nitrile exam gloves.
With the vaccine administration in full swing, it doesn’t seem like production will increase any time soon. This will cause a massive glove shortage in the U.S and other countries especially for the upcoming months. Since the pandemic started, we have been struggling to keep any gloves in inventory as most of our gloves get sold before the containers ever arrives. While we have tried several different methods of allocation, we have yet to find one that pleases everyone. Factory delays, lack of shipping containers and COVID-19 outbreaks have made it impossible to guarantee delivery. Asking our customers to commit their scarce financial resources for a long period of time was problematic to say the least. In the end, we found out that announcing new stock arrivals two weeks before the cargo reaches US, was the most certain and economically viable solution for our customers.
It is unlikely that the regular production of gloves will resume any time soon and that the supply chain issues will subside. Constant and honest communication with our customers remains the best strategy to optimize personal protective equipment (PPE) supplies for our customers.
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