Third of four parts
Currency performance was mixed at the end of last year and the start of 2024. The Malaysian ringgit, the Singapore dollar, and the Thai baht declined against the U.S. dollar. The ringgit specifically is close to its lowest level to the U.S. dollar since the Asian financial crisis in January 1998.
A strong dollar meant more favorable glove prices at the factory level for U.S. buyers last year, but it is unpredictable if favorable currency scenarios will last. Although the resurgent dollar is exasperating central bankers and governments around the world, forcing them into action to relieve the pressure on their own currencies, it is highly likely that the current impact will not be as favorable in the next 12-18 months.
One way glove manufacturers are looking to get back to profitability is through increased automation. Automation can improve efficiency and reduce labor and production costs for manufacturers. We expect this trend to continue and have a measurable impact on productivity over the next few years, which should help most large glove manufacturers get back to profitability post-pandemic.
As a general example, 15-20 years ago, on average, a disposable glove line at a factory would produce 170,000 cases of gloves a year requiring approximately 8 employees. In 2024, modern lines produce around 380,000 cases of gloves per year (+125%) with up to 75% less labor force.
It is reasonable to expect that new glove lines may add another 20-30% in productivity in the coming years. As they optimize utilization capacity and shut down many old lines, all major manufacturers continue investing in new, highly automated, and productive equipment.
Costs have been trending high
Demand and prices for NBR—the main raw material used in glove production—are expected to remain high due to higher oil prices and the greater need for nitrile in most industries.
Raw material prices, which account for 30% of total production cost, have trended upward since October 2023. Natural gas prices, which account for 20% of total costs, rose in the second half of 2023. Some of these costs are expected to normalize in the second half of 2024, when analysts expect a return to profitability.
Economic conditions including inflation rates, interest rates, and consumer purchasing power could also influence the affordability and availability of raw materials.
Download AMMEX’s entire Q2 Disposable Glove Market Update.