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VIP Gloves sees market shift from vinyl to nitrile gloves as demand surges

VIP’s sales orders have been filled through to the second quarter of 2021, with recent orders at higher sale prices which vary, depending on the specifications and volume.

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Demand for gloves has surged due to the COVID-19 pandemic

Vinyl gloves are made from polyvinyl chloride (PVC), which produce dangerous dioxin and other carcinogenic emissions across their life cycle (from manufacturing to landfill disposal).

Some vinyl gloves are also found to contain toxic plasticiser chemicals called ortho-phthalates that can leach into food.

Malaysia’s Maybank Investment Bank notes that demand has gradually switched from vinyl to nitrile rubber gloves, with the trend starting as early as 1999, for the medical gloves segment.

Global demand of 330 billion gloves this year

VIP Gloves Ltd (ASX:VIP) manufacturers nitrile gloves, which are allergy-free, puncture-resistant, have good barrier protection against infection and contamination and are suitable in medical and high-risk tasks.

The company said sales orders have been filled through to the second quarter of 2021, with recent orders at higher sale prices which vary, depending on the specifications and volume.

With the impact of COVID-19, the Malaysian Rubber Glove Manufacturers Association is projecting an estimated global demand of 330 billion gloves this year and expected annual growth of 20% this year.

According to Macquarie Bank, VIP looks set to benefit from strong glove market fundamentals with glove demand expected to remain robust driven by COVID-19.

The resurgence of COVID-19 in Victoria and NSW is an example of the need to maintain all the hygiene fundamentals for many years to come.

Share price rally in Malaysia

A big part of the recent trading frenzy in Malaysia has been helped by the meteoric rally in the shares of glove makers.

More than US$1 of every US$10 invested in the nation’s stock market right now is a bet on gloves due to the extraordinary demand for the product during the pandemic.

Quick facts: VIP Gloves Ltd

Price: 0.08 AUD

ASX:VIP
Market: ASX
Market Cap: $59.65 m
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VIP Gloves Ltd sees 'tremendous growth potential'

VIP Gloves Ltd's (ASX:VIP) Sebastian Chang tells Proactive's Andrew Scott he expects the increase in revenue from nitrile glove production to continue into the financial year 2021. He says the revenue growth is attributed to higher average selling prices (ASP) of gloves, which is expected to...

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