It is vital to stay abreast of industry updates and news about price fluctuations of natural and synthetic materials needed to produce gloves. What is being developed is an econometric model for price forecasting.

Inflationary pressures show signs of longevity in China. U.S. consumers buy cheap imports because the yuan has been undervalued. This has led to a huge trade deficit in the United States. Because of the recent increase in the price of imported goods, the United States consumes less goods from abroad and exports more goods made in the United States.

Currency plays a key role in commodity prices. The yuan has risen 28 percent against the dollar in six years. A weaker dollar is good for U.S. exporters, but a stronger yuan and rising domestic costs in China have pushed up the cost of goods for U.S. shoppers.

The U.S. recently reduced the number of barrels it imports due to higher oil prices and weaker demand. Oil imports have been on a downward trend since 2005 and this trend is expected to continue. High oil prices reduce consumption while increasing production, leading to lower imports and lower fuel prices.

As the supply of natural rubber increases in 2011, the demand for natural rubber will decline due to the setback of Japanese automobile production and the decline of automobile demand in China. Fiscal tightening in China will lead to lower rubber prices as speculative demand for rubber weakens.

Large-scale planting of natural rubber trees in 2006-2007. It takes 6 to 7 years for rubber trees to produce sap. Short-term supply is inelastic, and long-term supply will not increase significantly until 2013. According to the International Rubber Research Group, global natural rubber production increased by about 5% year-on-year.

China’s auto sales growth in 2011 is expected to decline year-on-year. China scrapped preferential purchase tax policies and rural car subsidy programs. 70% of the global rubber supply is used in tire production. According to the IRSG, total global tire production will be lower than in 2010.

Natural rubber prices have surged on the back of oil prices, a weaker dollar and excess liquidity. Given that GDP growth is declining in Europe, Japan, China and the United States, demand for natural rubber will decline in the short term. The substitution effect has increased the demand for vinyl and synthetic gloves as the price of latex gloves has risen.

Latex prices typically track crude oil prices. Given the current oil supply and demand situation, the crude oil market price should be between $75-$85 per barrel. Based on the moderation in crude oil prices and all of the above factors, latex prices will moderate or be flat this year.

Nitrile-butadiene rubber (NBR) now accounts for 68% of total global synthetic rubber consumption. Demand for NBR has skyrocketed – this growth is attributed to the production of NBR (nitrile butadiene) gloves. About 60% of the material used to make nitrile gloves is butadiene.

Although latex gloves have been the preferred choice in the medical industry due to better elasticity and cheaper ASP, the demand for nitrile gloves has been on the rise. In 2010, synthetic glove exports to the US, EU, Japan, Canada, Australia, China and Brazil increased by 58% year-on-year. High latex prices make nitrile gloves cheaper and more attractive. The continuous advancement of nitrile production technology has narrowed the quality gap with latex gloves. Latex allergy is also a problem. Given that nitrile prices are more stable than latex prices, glove manufacturers can better protect their profits by using nitrile rubber to control inventory costs.

Supply issues have negatively impacted the prices of nitrile gloves and petroleum-based vinyl gloves. Nitrile gloves are a derivative of petroleum. Over the past six months, raw material costs have increased, and transport and fuel surcharges have risen sharply. In view of the increased demand for NBR, manufacturers have experienced shortages of raw materials. Japanese manufacturers were also affected by the recent earthquake in Japan. Nitrile gloves prices will rise in the near future.

Vinyl costs have risen nearly 25 percent this year. Prices rose by an average of $3 to $4 per case due to persistently high oil costs and a shortage of synthetic materials. Disposable glove consumers have increased their overall demand for vinyl as latex and nitrile gloves continue to outpace vinyl gloves. By trading vinyl, the substitution effect is putting upward pressure on vinyl prices and will continue to do so in the near term.

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