Why huge PPE stocks do not exist?

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This article is an amalgamation of multiple articles posted by PPE community members across the internet. I have used them as a source and made this single article to capture the real-world facts surrounding the over-saturated PPE industry. Links for references and sources are given at the end.

I believe everyone in this industry has seen wild claims certain intermediaries make by having a seller {or buyer) for billions or even trillions of masks and gloves OTG and Production. There are usually three reactions to that: people either laugh at them, people believe in them, and other people do not know what to believe. I am writing mostly to these people. I am tired of arguing in the comment sections of different social media with Believers, but if I can help someone not fall into these “traps” it is worth the effort. So, let us discover, why are huge stocks scams.

1. The Financial Problem

A regular 3M 1860 masks costs between $1.50-$2.60 (depending on the quantity, country etc., but let us stick to this price). If I claim to have 1 billion pieces of it somewhere stashed in a warehouse, that means that I have a locked-up capital of roughly two billion dollars. That is something companies really hate: locked-up capital is impractical because it does not work, it will not make more money. If I say I have the same amount of money in different shares on the stock exchange, my money works for me plus one can receive dividend pay-outs of the companies I have shares in, or I simply sell it when the price of the shares rise, and with two billion dollars even 1% increase is an enormous gain. But to have it locked up, sitting in a warehouse is a huge risk – the money just sits there, it is a huge hole in my cash flow, and it takes time and effort to sell it. Not to mention, that the price of the product increases over time: I must pay for the storage, the security, and the logistics associated with it. So, essentially, I have huge amounts of a product, that I can’t sell in an instant, and the chance that I will find a suitable buyer for it decreases over time, since the costs associated with it are growing with every day.

On the other hand (buyer side), it is also impractical to buy such a huge quantity at once. It blows a hole in the cash flow of the company, it is an enormous logistical challenge to transport the products, not to mention the costs of securing such value. But let us see an easier explanation: most companies simply do not have the financial background to buy and sell so many products. We are talking about billions of dollars here, and even if a company is worth several billion, they will not invest 20-30-50% of their entire revenue into one single deal. No one does that because it is too dangerous.

2. The Logistics Problem

Does someone calculate what volume a regular box of masks or gloves has? Now multiply that with 1 billion, 10 billion, 1 trillion, etc. Where do you find storage places for all that? How many containers do you need to move from one place to the other? How many container ships do you need for this challenge? Just to show you a rough comparison:

Representation: 1B Boxes of 3M 1860 Masks

VISUALIZATION OF 3M 1860 MASK OTG IN COMPARISON TO MONEY

You see the problem now? I know, a lot of people claim that there are huge storage facilities in Asia and the US, but seriously, do you think you just put all your products into them, and that’s it? You need to secure them, you need to pay for staff to handle them, you need to find containers to move them (try finding 1000 containers a day, not ten thousand!) etc. These tasks are basically impossible for these quantities, and I also refer to the point above: all these costs would drive up the end price of the gloves and masks so insanely, that there would be no suitable buyer for them in the end.

3. The Political Problem

COVID-19 causes states of emergencies in a lot of countries worldwide. This forces governments around the world to take desperate measures, including seizing stocks already on the ground. If there is a stock of one billion gloves ready to be dispatched and just waiting for a buyer when the state of emergency goes into effect, the government will seize it in an instant, and the seller will receive his money only weeks after filing a complaint. And they will only receive the money they invested in, not the associated costs. So, in other words: no big returns then.

4. The Bureaucratic Problem

If stocks that are in the biIIlion range would accumulate there would be any hard evidence for their existence. You could see it in the statistics of the ports where they get shipped or unloaded, you could see it in the statistics of customs. But no, there are no reports of these massive sized stocks anywhere. You can find million-sized stocks, but not billions and above.

5. The Material Problem

3M 1860 is made of meIt-woven fabric and nitrile gloves are made from rubber. These are materials we have plenty of under normal circumstances, but not for these quantities. There is simply not enough material at hand to produce trillions of masks and gloves, and there are not enough factories to produce so much. Billions yes, but trillions, not to mention, ten-trillions…simply, no way. It cannot be produced because there is a limit on how much material we have.

6. The Time Problem

The pandemic started in January 2020. That is almost one year from now. The world’s leading manufacturers have ramped up their production capacities as much as they could, but the timeframe (12 months) is simply not enough for stocks this big to accumulate.

7. Other Problems

Do you seriously think that there is a buyer for this amount, or there is a seller company that has sufficient funds for this? In comparison, 500 billion boxes of Cranberry evolve cost roughly 8,500,000,000,000 (8.5 trillion) USD. That is more than 40% of the entire GDP of the United States. I have seen claims of intermediaries to have 500 TRILLIONS of 3M 1860 OTG – that would make 3M richer than the entire world times three. Not to mention, if such a the deal would be closed, and an intermediary would receive let us say 1% from it, he could buy Amazon, Google, or entire Germany in an instant. Ridiculous.

For the most part, I see a lot of stupidity everywhere. A lot of scammers with no administration around to police them. So interesting facts to have when it comes to gloves and other PPE you might see for sale.

  1. Top Glove is the largest manufacturer of gloves in the work. Since having to close 27 or was it 28 factories due to covid they barely produced 700 million boxes of gloves in 2020. They did over 800 million boxes in 2019. They might be able to hit the 1 billion boxes landmark in 2021.
  2. Cranberry only produced 400 million boxes of gloves in 2020. They have been adding lines and they are looking to produce up to 500 million boxes for 2021. Cranberry themselves do not ship gloves until they are ordered. You will never see more than 10k-50k boxes of Cranberry gloves OTG. This is coming straight from Cranberry themselves.
  3. Cranberry on their site can give you a list of distributors that are authorized to actually sell Cranberry gloves. I know one of them. One last thing about Cranberry when they do sell. They give the price to the distributors on how much they can sell it for. If you are seeing it in the $20s or teens is a scam. I know exactly how much Cranberry is selling their gloves for. So do not get fooled or scammed.
  4. 3M will never have more than a few million masks at a time OTG to sell. When you see people with hundreds or hundreds of millions of masks OTG, it’s a scam.
  5. People will try to justify these lots by saying that these are paper contracts or futures contracts (like commodity trading). Let’s assume for a minute these are paper contracts (if such a thing even exists). If you are aware of how futures contracts work. You need to have warehouse storage capacity at the time of contract expiration for physical delivery (like Oil Futures). That means someone will have to pay and take the stocks in the end. The seller won’t sell you large quantities of stocks unless you can prove you have the capacity to hold these stocks or the end-use of the stocks.

Statistics supporting facts

Here is the quick rundown of the statistics supporting facts. You will see how hundreds of millions and billions of stocks are practically impossible.

The formula used can be found here. You can copy the sheet and change the values to get the results for stock availability duration.

As you can see, in the most optimistic scenario, 1B boxes of Cranberry, in the entire country of USA, can be used for two whole years. The same goes for the state of California. 50M boxes of Cranberry will last 21 months in the entire California. Now, think about people who are closing OTG 1 billion boxes of Cranberry deals every other week. 5 minutes silence for those poor souls.

Conclusion

So, let that sink in for a moment before you start making arguments to convince yourself about the existence of such stocks. I know, it is hard to let go of the dream of hitting the jackpot and making billions overnight, but if you think about the situation in a logical way, you need to admit, there is no point pursuing non-existing products.

Let me ask you: have you ever seen hard evidence for a stock above 50 million anywhere? And by hard proof, I mean a real SGS report, a Bill of Lading, maybe a video of a soccer stadium fully stocked with gloves or masks – not just some claims by a guy you know over the internet for a couple of weeks. I would bet you have never seen such a thing. Because they do not exist. I have personally reviewed dozens of these claims, maybe even a hundred, and I have never ever seen any proof of such a product. So, have some common sense and steer clear of joker-brokers who claim to have such quantities of stock.

Sources and References:
1. Some PPE myths debunked + some useful guides : WeNeedPPE (reddit.com)
2. About Cranberry and other products : PPE (reddit.com)
3. VISUALIZATION OF 3M 1860 MASK OTG IN COMPARISON TO MONEY – Global Resource Broker
4. American Health Association, National library of Medicine, Wikipedia.

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