Now even 60 Minutes is reporting on the nitrile and latex glove shortage.(1) It is a must watch to affirm what I have been reporting for months and suggests that our recommendation of working with a trusted buyer’s agent is the only way to approach this crazy market situation, at least in Malaysia.
If you needed further confirmation, the United States Government Accountability Oﬃce (GAO) just released the “Report to Congressional Committees, COVID-19, Urgent Actions Needed to Better Ensure an Effective Federal Response.”(2)
The major conclusion of the 400+ page study is that medical grade nitrile and latex gloves are in the shortest supply of all critical PPE’s. This mirrors what I have been reporting in real time on this blog, and the reasons for the shortage.
For another real time update, the glove market continues to tighten, and participants are starting to panic as Corona virus cases and deaths reach new highs.
Most glove market participants are reacting in an irrational manner and continuing to try and buy gloves as if they, the buyer, are in control rather than understand the fundamentals I have explained in detail in the Lawton On Markets blog over the past few months. Further, they are attempting to execute through whatever broker shows them the lowest price, only to have that price increase or fade away once they show what they are attempting to do. Not advisable in this market.
The result is that the buyers are continuing to get jerked around by their own approach, and brokers that have no real access or edge to obtain latex and nitrile gloves in this sold out crazy market in Malaysia, the main supplier. Many buyers have been taken advantage of by these “brokers” and are now wary, but they still need to urgently buy gloves. They need to take a more market savvy approach.
Here are a few points about the current glove market:
1. Almost all the nitrile and latex glove manufacturers are 100% sold out, many for the next 2 years or more. It is a waste of time to call them. I will give you all their numbers if you want to try.
2. The supply of gloves cannot be quickly increased as it was for masks and other low tech PPE’s. It takes a year or more to increase supply.
3. The demand for gloves is skyrocketing. The GAO report outlines only how far behind the US government is in obtaining gloves. Demand is similarly high from almost every other government around the world, as well as private industry and NGO’s.
4. Several large sovereign players have cornered much of the current and future capacity, and continue to buy whatever they can find, even in lots of a billion boxes, or more. They have staggering amounts of immediately available funds from their governments to buy immediately.
5. Most brokers, even if they used to have access to gloves, are unable to procure gloves in this new sold out market.
6. The Wall Street Journal report that many glove brokers are unethical is correct.(3)
7. Prices are going up every day, and they are going up a lot more given the skewed supply/demand imbalance that will continue for at least a year, despite the vaccine, according to many analysts.
8. In order to find gloves, one must now purchase in the secondary market from current holders of gloves, or purchase future output from someone who owns future glove production allocations.
9. Most such owners do not want to reveal who they are. They work through a select group of trusted agents that are hard to find or distinguish from unethical brokers.
10. Many sellers have been inundated by brokers that do not have the ability to close deals, therefore buyers must prove first that they have the financial capability to buy the gloves through proof of funds before the seller will offer proof of gloves.
11. Malaysia, the country that produces 70% of medical grade gloves, is on hard lockdown at least until the end of the year. You cannot get into the country even if you wanted to.
12. Buyers demanding proof of gloves through an SGS report before they provide a Letter of Intent to buy along with proof of funds will not be successful in Malaysia at this time.
13. The sellers are now firmly in control, so buyers must follow the sellers demands, not the other way around.
14. Sellers do not care about who you are or how much money you have. They have multiple buyers for every box of gloves they offer at anywhere near current market price.
Sorry folks. I know it is painful, but the above points outline what you are up against if you want to be successful in buying nitrile or latex gloves in this market. And most buyers already know that. Many have tried to buy gloves many times and have not been able to get a deal done, or worse, lost money trying.
So, what can you do? For analogy, think of a market you are familiar with, residential real estate. What would you do in a one way residential housing market where there are no homes listed for sale and prices are moving up? You would hire a buyer’s agent. You might say you tried that 100 times already for gloves. No, you did not, you contacted a broker, not a buyer’s agent. The broker works for the seller and themselves. And even if you have been engaged by the buyer, you are not a buyer’s agent with access to the market. You too need a buyer’s agent. A buyer’s agent works for you. Few people in the glove market today are acting as the buyer’s agent.
We recommend five simple criteria to select a buyer’s agent to help you purchase gloves in Malaysia:
1) A five year or longer track record in the supply business in Malaysia (fully licensed);
2) Relationships at the international standard glove manufacturers, wholesalers and with local sellers to identify and negotiate deals on your behalf;
3) Official Supplier to the Government of Malaysia;
4) Endorsed by the Government of Malaysia;
5) Associated with a reputable US or European consortium that insists on international standards of good governance and that can be properly vetted.
Seagate Global Trading Sdn Bhd is the only company in Malaysia that meets these five criteria. We have a team of over 15 people on the ground in Malaysia with intimate knowledge of the inside glove market there. They know where the glove owners are, what is for sale, who is legit and who is not, and they are expert at negotiating with other Malays, something you definitely do not want to do on your own. Seagate Global is in direct contact or one degree of separation away from actual sellers and has a sterling reputation you can check. Call us. Let Seagate Global Malaysia protect you and help you to secure gloves in this most difficult of markets.
(1) https://www.cbsnews.com/news/nitrile-glove-shortage-covid-19-vaccine-60-minutes-2020-12-06/ (2)https://www.gao.gov/reports/GAO-21-191/ (3) https://www.wsj.com/articles/brokers-peddle-fake-medical-gloves-amid-coronavirus-shortages-11600179870