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if glove is going to be oversupply soon, is there a need for US government to work on its defence production act? Is there a need for gloves manufacturers to spend big money to expand aggressively?
the worry is unfounded. we need to think about it logically. New comers with small capacity and immature dipping formulation and higher cost will be the first to die when price's normalized. Gloves aren't the same as mask, entry barrier is much higher, that's why till now there's still none of the new comer's product in the market.
Suppose it can b up. When uptrend time, rss come to attack and sell low. I c today morning, ppl q to sell at 6.5 many lots, buyer want to buy at RM7 and rm7. 2.
prior outburst of covid-19, all glove company were suffering from competitive market, whereby profit margin keep falling for few consecutive years to around 25%.
later on, the covid-19 drive up the demand and boost the profit margin to historical high, i.e. 50% (that's why US not happy with it).
while more players step into the glove industry, together with gradually declining market demand, the profit margin will certainly drop for few consecutive years to a historical new low which is below 25%.
in gloves market at normal times, the end user price was elastic. No matter how fierce the competition, the end user price didn't change much, because the competition is mainly at the OEM level. Manufacturers compete with each other to get supply contract to big distributors. However, post-covid situation has changed, supplier with OBM capability has got the huge opportunities to continue supplying the end users which they were not able to connect with in the past.
The ASP will be able to sustain at a much higher than pre-covid price, because of this structural change. This is not something the new comers can do, they do not have the capability to go OBM, thus left to fight for OEM contracts. Btw, US is frustrated with not enough supply, not higher price (US is a strong capitalism country, they understand supply and demand very well and the impact to pricing).
well, advised to have a look into fact sheet instead of presuming everything by own. end user never the main consumer of medical glove but hospital, a place where branding doesn't works but quality & price does.
plus, kindly check back the previous news on US banning topglove, and the reason Trump jumping on glove's price. that's part of the reason why US encourage the establishment of glove factory in US for now. anyway, this is somehow a good news to supermax though not for others.
When i said end user, it includes hospitals, healthcare sectors and all glove consumers. Supermax is already an established, well known supplier in US dentistry market. For hospitals, not only quality and price, but connection. pre-covid such connection was hard to established but now they are calling Supermax Healthcare US themselves to ask for supply assistance.
OBM does not entirely means branding awareness, but the ability toncut awa6 middleman for to reap the highest benefit posible.
Btw, reason behind topglove's ban was just an unconfirmed rumours. All suppliers raised selling price, not just Topglove, but why is it the only one got bannned?
