Third in a series
Our Q2 Market Update covers the potential impact of tariffs, but we were never under any illusion that it would age well with all the rapid news and changes. As of mid-May, while many reciprocal tariffs remain on hold, last week, the US and China announced a reduction in tariffs, with US tariffs on China reduced to 30% for 90 days.
We expect the tariff news to continue and news around this topic to remain dynamic. However, when it comes to disposable gloves, many other factors that impact glove production costs continue to develop. Raw material costs remain the most significant expense category, accounting for a large portion of total disposable glove production costs.
Nitrile butadiene rubber (NBR), a primary component in nitrile gloves, could experience supply constraints due to production shifts out of China, maintenance at major chemical facilities, and increasing competition from the automotive and construction industries for nitrile-based gloves.
Meanwhile, manufacturing bottlenecks are appearing as production facilities are challenged with labor costs, rising energy costs, implementation of new quality control measures in the wake of regulatory changes, and technological transition challenges as manufacturers upgrade equipment.
Price volatility for natural rubber latex has decreased due to a balanced supply from Southeast Asian producers. NBR prices, however, remain elevated due to continued strong demand and petroleum price fluctuations. The price spread between natural latex and nitrile has narrowed compared with historical averages.
Another key variable is energy, which represents up to a growing portion of production costs and has significant regional variations. Among the cost factors are electricity prices, with manufacturing facilities in Southeast Asia facing 5-7% higher electricity costs compared with 2024.
What happens with tariffs will continue contributing to all the abovementioned factors. Besides the direct added cost, tariffs may also reshape the existing trade routes, leading raw materials, labor, and products to move in different ways in the future. Stay tuned for more updates.
Download our Q2 Disposable Glove Market Update.
Missed our first post of the series: Q2 Market Update: Tariffs Take Centerstage? Check it out here.
Missed our second post of the series: Q2 Market Update: Logistics Always a Factor? Check it out here.
