Market Commentary We expect ongoing elevated demand and new cost increases to continue to impact glove availability and prices beyond 2020
Supply Update Factories are returning to normal utilization levels; however, they now face higher operating costs which is further impacting price – Incentive payments required to attract labor – Raw material shortages for certain materials (e.g. NBR used in Nitrile glove) represent new threat to availability – Higher distribution and logistics costs including PPE/ new safety protocols required to operate safely Factories are rationalizing SKUs to increase efficiency / output – this will limit some offerings going forward Increasing instances of counterfeit PPE flooding the market Factories are continuing to communicate future price increases
Demand Update
In April 2020, ACR estimated that global glove demand would increase by 150%-200% through September However, we now believe the following to be true: – Current demand levels are higher than originally estimated (some are now saying 200-300% increase) – Duration of higher demand will last longer than originally predicted (at least the next 12 to 18 month) Long-term global glove market expected to grow at 13% CAGR through 2027 (~2-3x pre-COVID estimates) 1 New glove applications and users driving higher LT growth rates Glove Market Timeline
February/March
May/June/July
Present
2020 Outlook
• Pandemic spreads globally
• Demand increases exponentially
• Preparations for 2 nd wave of the virus in Fall drive continued demand • Raw material shortages • Aggressive price increases and long lead times (12 Mo.) • Factories selling out capacity to highest bidder
• Elevated demand will continue into 2021 • Lack of new capacity being added to satisfy new normalized demand • Prices should remain above historical levels • Challenging payment terms
• First shelter in place orders result in factory shutdowns in SE Asia • U.S. customers begin stockpiling PPE drawing down domestic inventory
• Factories raise prices as demand exceeds supply • New market participants enter further driving up prices • Prepayment requirements
Glove Prices
1. Allied Market Research
Low High
2
Made with FlippingBook Online newsletter