Hospitals in 2020 were strapped for cash and prepared to pay exorbitant amounts for PPE. With one exception, the spectacular early pandemic tales of ruthless medical supply procurement are essentially in the past.
According to US Census Bureau data released this month, the price of syringes has stayed constant for more than a decade, ranging between 7 and 8 cents each, despite an enormous spike in worldwide demand that has seen 10.4 billion doses of the COVID vaccine delivered so far.
Except for a temporary price increase for N95 and KN95 masks in January 2022 during the height of the omicron wave, N95 mask costs fell by almost five times between 2020 and 2021, from $1.52 to 32 cents per unit. Disposable masks are now only 4 cents each, down from 14 cents.
A dozen pairs of medical gloves costing 56 cents in 2019 (or less than 5 cents each) increased to $1.77 per pair in 2021, a sharp increase in the annual average price of medical gloves imported into the US. The value of imported rubber gloves into the US increased from $2.3 billion in 2020 to $7 billion in 2021 due to price rises and increased demand.
Increasing demand and rising costs
A poll conducted in January 2021 by Premier, a US healthcare group procurement organization with a membership of more than 4,000 hospitals and health systems, revealed that finding exam gloves was the second-biggest barrier in providing treatment for COVID patients after staffing concerns.
According to a 2021 Premier study from April, glove demand has increased by 40% since the introduction of COVID vaccines, outpacing global production capacity by 215 billion units. According to a June 2021 examination of glove costs by a US International Trade Commission researcher, there would be a need for around 660 million gloves in the US alone if the whole population was fully immunized.
Rubber gloves are now being used by customers and former bare-handed grocery clerks in addition to health professionals.
Limitations on the supply of Nitrile gloves
Southeast Asia produces most of the world’s rubber glove supply since there are raw materials for natural rubber and nitrile glove. The largest manufacturer of nitrile gloves, a type of synthetic rubber compound, and natural rubber latex gloves worldwide is Top Glove, a Malaysian business.
To meet the pandemic demand in 2020, companies in the US and others began producing N95, surgical, and textile masks. However, the availability of raw materials for rubber gloves remained constrained. It was challenging to establish new rubber glove plants to increase worldwide production capacity because butadiene and acrylonitrile, the compounds used to make nitrile gloves, were in short supply, and the ceramic hands used to mould them.
The US then prohibited the importation of rubber gloves from Top Glove in July 2020 as a result of plausible but unconvincing evidence of forced labour, including “debt bondage, excessive overtime, abusive working and living conditions, and retention of identity documents,” according to a statement by Customs and Border Patrol. In November 2020, Top Glove received a similar order from the Malaysian government, which required it to close many of its operations for some time because of a significant covid epidemic among employees living in close quarters.
Only September 2021 saw the lifting of the import embargo. Top Glove stated at its annual meeting last month that due to the restriction, North America will contribute 15% of its sales volume in 2021 as opposed to 22% in 2020.
The pandemic has made it more difficult and expensive to get single-use gloves, particularly nitrile, just as global shortages of masks and disinfection supplies have boosted the pricing of similar items. Below, we go over the causes of the price hikes:
- Supply and demand
Since COVID-19 began, the demand for disposable nitrile gloves has increased by 45% worldwide. The supply and demand imbalance amounts to a shortage of 214 billion disposable gloves since demand has skyrocketed while supply grows only gradually.
According to US-based Allied Market Research, the market for disposable gloves was $6.8 billion worldwide in 2019 and is projected to nearly triple $18.8 billion by 2027.
- Price & capacity of production
The growing demand for gloves continues to outpace the available worldwide supply even as glove manufacturers produce at their utmost capacity.
Production prices are rising as a result of the shortage of labour in the glove industry brought on by the pandemic’s health and social limitations. To stop the virus from spreading within their buildings, factories must use Covid testing; otherwise, lockdowns happen, as they did at one of the biggest glove manufacturers in the world, impacting thousands of workers.
There are also instances of nitrile gloves being hampered due to a lack of glove moulds.
- Raw materials
It is anticipated that the scarcity of raw materials would cause the global shortage of nitrile gloves to last for more than a year into the first half of 2022.
The raw material-supplying factories are expanding their capacity, which is insufficient to meet the present demand levels. New facilities may take up to 18 months to complete the current demand for nitrile rubber.
According to the world’s largest manufacturer of rubber gloves, “the lack of raw material for our nitrile gloves and the interruption to the supply or manufacturing of other material, such as packaging materials, owing to the worldwide lockdown, has caused an increase in the production cost.”
- Third-party dealers & investments in hedge fund
To keep their company running, third-party dealers are all over social media, selling gloves to anyone willing to pay high rates. Some firms are unloading rejected high-quality products that they can’t legally sell to hospitals and governments. Merchant merchandise is dismissed off the manufacturing line and offloaded through third-party brokers and freight forwarders without honestly needed export documentation.