Raw Latex Prices on the Rise

By Lisa A. Coleman

Over the past year, the cost of raw latex has almost doubled, a fact largely unnoticed by end-product users. This month, however, cleanroom and surgical glove customers will begin to feel the impact.

Until recently, most glove manufacturers had been able to absorb the hefty price increases of raw latex materials, but now these costs will be passed onto customers. For example, one importer, who was paying $24 per 1,000 medical-grade gloves (about one case), is now looking at about $35 per 1,000. Glove manufacturers are torn between lying low or trying to prepare customers for the cost increases by educating them as to the reasons for the hikes.

Responding to rumors of a latex shortage, manufacturers instead point to worldwide demand and economic factors in rubber-producing countries such as Malaysia for the price increase in raw materials. In 1994, there was a 60 percent increase in raw latex prices. This year, the prices are still rising.

“The reality is that Malaysia has a shortage of labor,” says Sandy Seidman, president of The Safety Zone, a glove manufacturer`s agent in Middletown, CT. Workers who once tapped rubber trees are moving to better paying microelectronics factories, therefore labor must be imported to tap rubber trees. Since imported workers increase labor costs, the cost of raw latex also goes up. In addition, rubber-tree plantation owners have lost interest in producing rubber and are switching to palm oil or other crops that yield a better cash flow. Poor weather conditions–a prolonged rainy season–have added to slowed latex production; and another factor contributing to the latex price hike is an increased demand for rubber from China.

A spokesperson at a major glove manufacturer estimates

that latex production in Malaysia has dropped to about 60 percent of capacity. But although latex production capacity is down and demand is high, a shortage is not predicted, says the source.

Another contributor to the price increase is a 156,000-ton worldwide shortfall of latex this year predicted by the Malaysian Rubber Exchange and Licensing Board and the Malaysian Rubber Products Manufacturing Association.

The latex glove industry has survived high demand/low supply periods before. In 1987, a shortage of latex exam gloves appeared almost overnight when the American Dental Association and the Center for Disease Control began requiring hospitals to provide gloves for certain medical work in response to AIDS and Hepatitis concerns. Demand increased so rapidly that American manufacturers could not satisfy it with increased production.

Because demand was high, U.S. manufacturers were taking any gloves available, which sent prices skyrocketing from $40 to $110 per case. Finally, by the third quarter of 1989, prices evened out, but some manufacturers were stuck with low-quality exam gloves.

Unfortunately, the ramifications of the 1987 glove shortage have scared some smaller Malaysian rubber producers. Memories of not being able to give gloves away has prompted some Malaysian factories to close. “Latex is expensive to buy. Factories that produce gloves are afraid to buy latex because they might not be able sell product,” says The Safety Zone`s Seidman. All these factors are contributing to latex glove price increases.

According to Safeskin Corp.`s (San Diego, CA) Director of Marketing Laura Poindexter, this month the company will increase its medical glove prices, and she predicts that cleanroom gloves will see a price increase by July. “Latex prices have increased 50 percent, and we`ve absorbed the cost increase until now. We can`t absorb it anymore because the price keeps going up,” says Poindexter. “There will be increases throughout the industry.” While many manufacturers preferred not to comment on price hikes for this article, others, such as Safeskin, believe it is better to educate their customers to the reasons behind the price increases. Says Poindexter: “A lot of end-users are not going to stop and think about labor in Malaysia or China needing more tires. What we`re trying to do is provide that linkage so that the customer understands what`s driving the price increase.” n