By Ms. Pinja Mann, Analyst at IB Consultancy
As the world keeps struggling with COVID-19 and the delayed and poorly planned vaccine rollouts, the rubber glove market keeps being the hottest pandemic trade by revenue. The market is expected to grow at a compound annual growth rate (CAGR) of over 13 percent during the period 2021-2026, according to the Rubber Gloves Market – Global Outlook and Forecast 2021-2026. The healthcare workers administrating the shots will keep the demand for medical gloves afloat, albeit not in such high demand as during the early months of the pandemic in 2020. The manufacturers will also be able to supply enough products to the buyers, monetizing the higher-than-average prices companies could charge for their products when supply-and-demand cycles did not meet. Moreover, South East Asian medical gloves market is projected to reach USD 373.7 million at 10.5 percent by 2027, exhibiting a CAGR of 10.5 percent during the forecast period, according to Fortune Business Insights.
Key glove manufacturers in South East Asia, e.g., Top Glove and Hartalega, are focusing on strengthening their regional brand presence to gain a stronghold in South East Asia. There has also been a clear trend of a more aggressive elevation of these key players’ production capabilities in the region. This is mostly to ensure their dominance in the global medical gloves industry. Increased production capacities enable these companies to bolster their regional presence, widen their offerings and their international sales horizons. In contrast, North America is the major consumer of rubber gloves in the western hemisphere, with the US dominating and leading the market. According to PR Newswire, a distributor of press releases headquartered in New York City, North America has some of the most rigorous safety practices that drive demand from several industries and sectors. The market is poised for continued growth and opportunities. The number of players operating in the market has the potential to surge, which could also see the rise of domestic players with mergers and acquisitions through global brands. Moreover, the innovations in synthetic rubber categories, e.g., neoprene, polyisoprene, and thermoplastic elastomer, could stand out from the competition because the North American market is open to new product launches.
Manufacturers were facing problems with attaining enough raw materials for making the gloves as well as keeping factories open, since the workers were also getting infected with COVID-19. As many Western nations had stopped manufacturing all PPE and sanitizers a long time ago, they had to rely on foreign products at first, before re-starting local, domestic production. As the Eastern world kept manufacturing and supplying the gloves, it became apparent that whoever would bid the highest amount would get the gloves first.
The pandemic made way to local and international glove manufacturers to record high profits for their products; the demand soared along with the prices because there wasn’t enough supply. According to Bloomberg, Supermax Corp, Bhd, Malaysia’s largest Own Brand Manufacturer and the world’s second-largest producer of rubber gloves, recorded the highest percentage change in 2020, rallying more than 1000 percentage. Supermax Corp Bhd was followed by Top Glove Corp Bhd, the world’s largest rubber glove maker, setting aside 10 billion ringgits to expand capacity by 100 billion pieces over the next five years, after reporting a record first-quarter profit in 2020. The two were followed by Kossan Rubber Industries, a Malaysian based public limited company and Hartalega Holdings Bhd, manufacturer of a wide range of latex gloves, e.g., natural rubber examination gloves, nitrile examination gloves, nitrile clean room gloves as well as natural rubber surgical gloves.
Based on the earnings outlook for Top Glove, Kossan, and Hartalega, the sector will remain stable. As a result of the vaccine’s rollout, the average selling prices, which were driven high due to the demand in 2020, will begin to normalize after the first quarter of 2021. Once the rollouts of Covid-19 vaccines are successfully executed, there is a risk of a down cycle in the manufacturing sector. However, the demand will remain stable because keyworkers still need gloves, and the general public has also become increasingly aware of personal hygiene as a biproduct of the pandemic, keeping the demand for the product alive. This outlook is also backed up by the Malaysian Rubber Glove Manufacturers Association (MARGA).
Moreover, according to AmInvestment Research, under AmInversment Bank Bhd (owned by AmInvestment Group Berhard) in Malaysia; developing countries will also keep using glove at an increased rate, since there has been evidence of broader adoption of gloves usage from non-medical industries, e.g., Food and Beverage Services as well as retail. There is also an anticipation of a structural change in the way gloves will be used. This notion is based on the assumption that as hygiene measures become stricter, glove usage per capita will rise as a byproduct across several industry sectors, not only healthcare. Nevertheless, the glove consumption per capita in emerging markets, e.g., China and India, is still relatively low, at around 2-6 gloves, whereas in the developed countries the amount is 100-280. Additionally, various glove production companies will continue their expansion plans. According to AmInvestment Research, the Malaysian companies, Top Glove, and Supermax, will see the biggest expansion as they add 30billion and 22billion pieces. The two are followed by Hartalaga, which will be adding 12billion, and Kossan adding 10 billion pieces, respectively. The rest of the capacity will be from SRI TRANG Gloves, a Thailand-based public company, and Intco Medical and Blue Sail, based in China. The latter has also become the leading enterprise in the industry ever since 2012.
In other developments the raw material prices have also been increasing over the past year, namely rubber and butadiene. Rubber prices have been increasing over the past year as the protective glove demand surged due to the ongoing pandemic. In parallel, the cost of butadiene, a key ingredient when producing nitrile, has been rising over the course of the past six months. Although the demand for gloves will most likely remain stable, even post-COVID, the average selling price is projected to decline since there is no longer an overwhelming rush for gloves, as was the case at the beginning of the pandemic when the majority of the Western countries were ill-prepared and lacking stockpile. The industry sector couldn’t produce enough gloves for every single country battling with the pandemic. Regardless, AmInvestment expects the average selling price to stabilize at a higher level than the pre-pandemic level because of the normalization of glove use across sectors and private individuals. The manufacturers will be able to cope with future demand due to large capacity expansions.
The onset of the COVID-19 pandemic in 2020 made the majority of countries in the West realize that they had no stock of PPE supplies for a crisis in a high caliber. The pandemic caused countries to recognize the importance of stockpiles and look to well-prepared, exemplary countries, e.g., Finland (the country gained global recognition for its stockpile, which has been in place since the second world war). This, too, will keep the demand for gloves afloat. Taking into account the ongoing demand the disposable medical gloves market is projected to witness outstanding growth during 2021-2030!
About the Author
Pinja is currently studying MSc Security and Crisis Management – Governance of Crisis at Leiden University. She joined IB Consultancy in November 2020.
