Delta variant can be the ultimate saviour for Big Four glove makers

THAT the Delta variant – the more contagious COVID-19 variant – is wreaking havoc both domestically and globally should be music to the ears of every glove maker big or small, listed or private enterprise.

Not only is the mutated variant causing a resurgence in COVID-19 cases and prompting the re-introduction of new lockdowns, concerns over rising cases may prompt glove counters to react optimistically in the short term, according to AmResearch.

“The Delta variant would slow the fall in glove ASP (average selling price) as glove urgency is buoyed by the rise in cases,” justified the research house in a sector update. “The smaller rate of fall in ASP would help support earnings in the next 12 months.”

First identified in India, the Delta variant has shown to be more transmissible and capable of causing more severe sickness

Moving forward, AmResearch expects market glove ASP to stabilise at US$30-35/1,000 pieces before tapering off far more gradually due to the following reasons:

  • Individual governments have updated their understanding and handling of pandemic situations such as being more capable of preventing outbreaks more severe than previously experienced.
  • Vaccination programmes are making good progress. Pre-existing vaccines still boast high efficacy rates against the Delta variant. Mixing COVID-19 jabs have shown to induce positive immune responses, possibly easing a bottleneck in global vaccination rates.
  • Even in a situation where COVID-19 becomes endemic, the research house expects it to be maintained at controllable levels. Improved knowledge on COVID-19, vaccine availability and higher vaccinated populations will likely prevent any future global outbreaks.

“Post-pandemic demand projections are still overblown,” cautioned AmResearch.

“We believe that the first post-pandemic year will see a flattish to negative growth in glove demand as opposed to steady growth projections by Frost & Sullivan and MARGMA (Malaysian Rubber Glove Manufacturers Association). This remains intact as the expected fall in COVID-19 cases is postponed rather than cancelled.”

Reiterating its “neutral” outlook on the glove industry, the research house opined that lasting glove demand is not so much driven by a blanket “paradigm shift” brought about by increased healthcare awareness.

“Instead, it is driven by more organic socio-political and legal structural issues such as healthcare outreach, enforceability of glove mandates as well as medical malpractice laws,” reckoned AmResearch. “These imply a slower and more gradual growth than current demand projections.” – July 7, 2021

 

Photo credit: Shutterstock and Bloomberg

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